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Dalal Street Week Ahead: 10 key factors that will keep traders busy this week

On Monday, the market will first react to the statement made by the US Federal Reserve Chairman Jerome Powell in the Jackson Hole symposium in which he also hinted about tapering by end of 2021. Investors will also eye Q2 GDP print, auto sales numbers and global cues.

August 30, 2021 / 07:31 AM IST

Indian market scaled new all-time highs, rising around one and a half percent in the week gone by. The rally can be attributed to positive global cues and a rally in metals, infra, energy, and banking names.

Benchmark indices, Sensex and Nifty touched their fresh record high levels of 56,198.13 (on August 25) and 16,722.05 (on August 27), respectively. For the week BSE Sensex added 795.4 points (1.43 percent) to close at 56124.72, while the Nifty50 rose 254.7 points (1.54 percent) to end at 16705.2 levels.
The rally was more broad-based this week as mid and small-caps bounced back after several weeks of underperformance. The BSE Midcap index was up 2.54 percent and Smallcap index gained 2.04 percent during the week.

On Monday, the market will first react to the statement made by the US Federal Reserve Chairman Jerome Powell in the Jackson Hole symposium in which he also hinted about tapering by end of 2021. Investors will also eye Q2 GDP print, auto sales numbers and global cues.

"Though the Nifty is inching towards the next milestone of '17,000', the recent surge lacks decisiveness due to the continuous underperformance of the banking index. We feel it's prudent to maintain a positive yet cautious approach and choose stocks from the sectors which are trading in sync with the benchmark," said Ajit Mishra, VP Research at Religare Broking.

Also, participants should prefer index majors and other heavyweights as any correction in markets may again derail the recovery in midcap and smallcap space, he advised.

Close

Here are 10 key factors that will keep traders busy in the coming week:

Q1FY22 GDP

The GDP numbers for the first quarter of FY22 will be released on Tuesday.

The economic growth is expected to be robust due to a low base in a year-ago quarter.

"We forecast India's economy expanded 21.2 percent YoY in Q1FY22, as a low base and a much smaller loss of activity due to the second Covid wave push growth to an all-time high for a single quarter," said Rahul Bajoria, Chief India Economist at Barclays.

"Our forecast suggests upside risks to our FY 2021-22 GDP projection of 9.2 percent, and if our forecast is realized, GDP growth could be close to double digits for the current fiscal year," he added.

Other Economic Data

Infrastructure output and fiscal deficit for July will also be released on Tuesday.

The Markit Manufacturing PMI for August will be released on Wednesday and Markit Services & Composite PMI data on Friday. Foreign exchange reserves for the week ended August 27 will also be released on Friday.

Auto Sales

Auto stocks are expected to be in focus in the middle of the week as companies will start releasing August sales data from Wednesday. The auto index was the underperformer in the week gone by, falling over a percent.

Maruti Suzuki, Tata Motors, Bajaj Auto, Eicher Motors, TVS Motor Company, Mahindra & Mahindra, Ashok Leyland and Escorts will be in focus as experts feel the recovery in sales is expected to continue in August and festive season momentum could support September data.

"Automotive monthly sales are expected to continue their recovery in August 2021, as economic activities are getting back to normal. Dealers are witnessing a strong rise in enquiries and order booking across segments and expect strong sales in the festive season going ahead. The demand scenario remains robust; however, concerns of chips shortage is affecting supply side for passenger vehicle segment," said Sharekhan.

The brokerage expects 2-wheeler and tractors to benefit from the rural economy. "Dealers are optimistic about the tractor segment’s growth due to good monsoon and improving economic activities. Recovery in commercial vehicle sales is expected to improve substantially."

Coronavirus and Vaccination

 

The market will closely watch the infections count as globally key nations including United States, United Kingdom, Germany have seen a spike in cases, but seems to be not worried much considering the increasing pace of vaccination across the country, experts feel.

India on Friday administered more than 1 crore vaccine doses, the highest ever vaccination seen in a single day since the start of the nationwide vaccination drive in January, taking the total vaccination administered in the country to over 62 crore so far.

IPOs

The primary market will see some action next week as two companies will launch their initial public offer (IPO).

Specialty chemical company Ami Organics, and diagnostic chain operator Vijaya Diagnostic Centre will open their IPOs during September 1-3.

Ami Organics plans to raise Rs 569.63 crore at the higher end of the price band of Rs 603-610 per equity share, while Vijaya Diagnostic Centre intends to garner Rs 1,895.03 crore through IPO, at the higher end of the price band of Rs 522-531 per equity share.

FII Flow

Last week, foreign institutional investors (FIIs) sold equities worth Rs 6833.33 crore, while domestic institutional investors (DIIs) bought equities worth Rs 6,382.57 crore. So far in August, FIIs have sold equities worth Rs 7,652.49 crore and DIIs have bought equities worth Rs 8,078.24 crore.

Experts feel the FII outflow may continue considering the expected Fed tapering by end of 2021 but the domestic flow will remain supportive.

 

Technical View

Nifty50 gained a fourth of a percent on Friday and rallied 1.55 percent for the week, witnessing bullish candle formation on the daily as well as weekly charts. This could be an indication of continuity on the upside in the coming week too with the index marching towards 16,900 mark, experts feel.

"The market not showing any sharp profit booking after a new high formation on Friday could signal a chances of more upside in the short term," said Nagaraj Shetti, Technical Research Analyst at HDFC Securities. Also, "This weekly pattern indicate an uptrend continuation pattern in the market after a small range movement."

Shetti said the lack of strong selling enthusiasm at the new highs has resulted in a range bound action and small upside breakout of the said range movement. "This is positive indication and there is a possibility of further upside in the short term. The next upside levels to be watched around 16,900 by next week. immediate support is placed at 16,550 levels."

F&O Cues

Option data indicated that the Nifty50 could see a broader trading range of 16,000 to 17,000 levels while an immediate trading range for the index could be 16,500 to 17,000 levels.

On the weekly basis, maximum Put open interest was seen at 16600 followed by 16500 & 16700 strikes while maximum Call open interest was seen at 17000 followed by 16700 & 16800 strikes. Call writing was seen at 17100 strike then 17000 & 16900 strikes with Call unwinding at 17200 strike. Put writing was seen at 16700 strike then 16600 & 16500 strikes with Put unwinding at 16100 strike.

India VIX fell from 14.01 to 13.40 levels, which supported the market to climb fresh record high on Friday. "Cool down in volatility from recent swing highs has given a buy on decline stance to the market and now VIX needs to hold below 12 zones to get more buying interest in broader market," said Chandan Taparia of Motilal Oswal.

Corporate Action

Here are key corporate actions taking place in the coming week:

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Global Cues

Here are key global data points to watch out for next week:

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Sunil Shankar Matkar
first published: Aug 29, 2021 08:19 am

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