The market recovered sharply and snapped a five-week losing streak in the highly volatile week ended May 20 with benchmark indices gaining three percent each amid worries over rising interest rate, inflation, volatile global markets and mixed earnings.
In the last week, BSE Sensex added 1,532.77 points (2.90 percent) to close at 54,326.39 while the Nifty50 rose 484.05 points (3.06 percent) to 16,266.2.
On the sectoral front, BSE Metal index surged 7.3 percent, BSE Capital Goods index added 5.3 percent and BSE FMCG, Auto and Realty indices gained four to five percent. On the other hand, Information Technology index fell two percent.
The BSE Small-cap index rose four percent and Mid-cap and Large-cap indices were up three percent each.
"We expect choppiness to remain high due to the scheduled monthly expiry. Besides, the monsoon-related updates will also be in focus," said Ajit Mishra, VP of research at Religare Broking.
"In line with the prevailing trend, global factors namely performance of global markets especially the US, China’s COVID update and Russia-Ukraine news will remain on participants’ radar," he added.
Here are 10 key factors that will keep traders busy next week:
1) Earnings
The earnings session is entering the last leg, as more than 1,200 companies are going to announce their March quarter results in the next week.
Companies announcing their earnings next week include Steel Authority of India, Mahindra & Mahindra, Oil and Natural Gas Corporation, Zomato, Adani Ports and SEZ, Grasim Industries, Bank of India, Bata India, Coal India, Fortis Healthcare, MOIL, NHPC, Aban Offshore, Bharat Dynamics, Berger Paints India, Cummins India, Hindalco Industries, Zee Entertainment Enterprises, BEML, Gail (India), Glenmark Pharmaceuticals, Godrej Industries, India Cements, Jindal Steel & Power, and United Spirits.
Others announcing earnings next week include Action Construction Equipment, Bharat Electronics, Birlasoft, Divis Laboratories, HG Infra Engineering, Kaveri Seed Company, The Ramco Cements, Shilpa Medicare, Sintex Industries, Talbros Engineering, Ugar Sugar Works, Asian Granito India, Balrampur Chini Mills, Bayer Cropscience, Globus Spirits, Grasim Industries, Ipca Laboratories, Jyothy Labs, NIIT, RailTel Corporation of India, Rites, Strides Pharma Science, Apollo Hospitals Enterprise, Ashoka Buildcon, , Kolte-Patil Developers, Praj Industries, Religare Enterprises, S H Kelkar and Company, SJVN, Suzlon Energy, Torrent Pharmaceuticals, V-Mart Retail, Voltamp Transformers, Whirlpool Of India, Bedmutha Industries, Mishra Dhatu Nigam, Muthoot Finance, NMDC, Piramal Enterprises, Quess Corp, Wonderla Holidays, Atul Auto, Engineers India, Rashtriya Chemicals & Fertilizers, Goa Carbon, IFCI, IFGL Refractories, and TTK Prestige.
2) Listing
After muted performance of two initial public offerings (IPOs) in the previous week, investors will now keep eye on two new listings in the next week: Delhivery and Paradeep Phosphates.
I) Delhivery:
Logistics and supply chain startup is going to list on May 24. The IPO ran from May 11-13 with a price band of Rs 462-487 per share.
Delhivery planned to mobilise Rs 5,235 crore through its public issue that comprises a fresh issue of Rs 4,000 crore and an offer for sale of Rs 1,235 crore by shareholders.
The IPO of 6.25 crore shares was subscribed 1.63 times on the final day.
The offer size was reduced to 6.25 crore from 10.75 crore shares as the company raised Rs 2,346.7 crore from 64 anchor investors including Baillie Gifford Pacific Fund, Schorder International, AIA Singapore, Amansa Holdings, Aberdeen, Goldman Sachs, and Singapore.
Retail investors bid for 57 percent of the shares reserved for them, while employees booked 27 percent of their portion.
The company has reserved shares worth Rs 20 crore for employees who will get shares at a Rs 25 discount to the final offer price.
Non-institutional investors bid for 30 percent shares of the allotted quota, while qualified institutional buyers have subscribed their portion 2.66 times.
Of the total issue size, 75 percent is reserved for qualified institutional buyers, 15 percent for non-institutional investors and the remaining 10 percent for retail investors.
II) Paradeep Phosphates
India’s second largest manufacturer of non-urea fertilisers and di-ammonium phosphates (DAP) in the private sector is going to list on May 27.
The offer opened for subscription on May 17 and closed on May 19. The price band was fixed between Rs 39 and Rs 42 per share.
The IPO consists of a fresh issue of Rs 1,004 crore and an offer for sale of up to 118.51 million shares by shareholders and promoters.
The issue was subscribed 1.75 times on day three with investors bidding for 47.02 crore shares against the IPO size of 26.86 crore units.
The company aims to mop up Rs 1,501 crore in total from a fresh issue of shares worth Rs 1,004 crore and an offer for sale of Rs 497.73 crore.
Retail investors bid for 1.37 times the 13.15 crore shares set aside for them while non-institutional investors’ portion was subscribed 82 percent. Qualified institutional buyers subscribed their quota of 8.07 crore shares 3.01 times.
3) IPO Opening
Speciality chemicals company Aether Industries Ltd’s IPO will open on May 24 and close on May 26. The price band is Rs 610-642 per share.
Shares are expected to be credited on June 2 and the firm may list on exchanges the next day.
The IPO consists of a fresh issue of Rs 627 crore and an offer for sale of up to 2.82 million shares by shareholders and promoters.
4) Global Data Points
Here are key global data points to watch out for next week:
5) FII Selling
Foreign institutional investors (FIIs) continued their selling in the month of May but at a reduced rate in the last week.
FIIs offloaded equities worth of Rs 11,401.34 crore while domestic institutional investors (DIIs) bought shares worth of Rs 9,472.91 crore in the week.
In the month of May till now FIIs have sold equities worth Rs 44,102.37 crore and DIIs have bought shares worth Rs 36,208.27 crore.
6) Corporate Action
Here are key corporate actions taking place in the coming week:
7) Technical View
On Friday, Nifty formed a bullish candle along with an island reversal pattern on a daily scale which has bullish implications after the tug of war between bulls and bears over the last seven trading sessions.
Nifty formed a bullish candle on the weekly scale after the decline of last five weeks and now a negation in lower highs on the weekly scale could trigger short covering spike.
"Now it has to hold above 16161 zones to extend this bounce towards 16400 and 16666 zones while on the downside support exists at 16000 and 15800 zones," Chandan Taparia, vice president, analyst-derivatives, Motilal Oswal Financial Services.
8) F&O Cues
Option data suggests a trading range between 15800 and 16500 zones.
On the option front, maximum call OI (open interest) was at 17000 then 16300 strike while maximum put OI was at 16000 then 15800 strike.
Call writing was seen at 16300 strike while meaningful put writing was seen at 16000 then 16100 strike.
"Volatility has fallen from higher zones from 24.55 to 23.10 levels, which supported for some smart pullback and now needs to come down for market stability," said Rupak De, senior technical analyst at LKP Securities.
"Nifty witnessed a strong recovery as the benchmark index ended about three percent higher. On the daily chart, the index has formed a double bottom. Immediate resistance is visible at 16400 and a decisive breakout above 16400 may induce a rally towards 16600-16700. On the lower end, support is visible at 16000," De added.
9) Rupee
After hitting a new low in the last week, dollar-rupee will remain in focus as the domestic currency inched towards 78 level and touched a fresh record low of 77.92 in the week ended May 20.
The rupee has erased some of its intra-week losses despite the sell-off in equities. Further positive news from China should improve sentiments and trigger a re-test of 77.25 levels. A move above 77.80 though will open targets of 78.25 levels for the current leg of rupee depreciation, said Emkay Global Financial Services.
10) Russia-Ukraine war
Global investors will keep an eye on the fresh development on the Russia-Ukraine war situation as Russia has suffered huge setbacks and heavy losses of men and equipment in the 86 day war.
The Group of Seven leading economies agreed Friday to provide $19.8 billion in economic aid to Ukraine to ensure its finances do not hinder its ability to defend itself from Russia's invasion.
Italy's foreign minister said on Friday that the nation has submitted a peace plan for Ukraine to UN Secretary-General Antonio Guterres.
Foreign Minister Luigi Di Maio said during a Council of Europe meeting in Turin, Italy, that the plan submitted on Thursday calls for local cease-fires to evacuate civilians along humanitarian corridors, and creating the conditions for a general cease-fire leading to a long-lasting peace, Reuters reported.
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