The market extended gains for the fourth consecutive week, scaling fresh record highs on June 11, as a consistent decline in fresh coronavirus cases with a pick up in vaccination drive and easing restrictions by states raised hopes for faster economic recovery.
BSE Sensex finally surpassed its previous record high (seen in February) and hit a new high on Friday, rising 374.71 points to 52,474.76, while Nifty50 gained 129.10 points to close at 15,799.35, during the week.
The broader markets also joined the rally with the BSE Midcap index rising 2 percent and Smallcap up 3.5 percent. All the sectoral indices, barring Bank and Capital Goods, witnessed healthy buying interest. IT, FMCG, Healthcare, Metals, and Infrastructure were leaders.
In the coming week, the market will first react to April's industrial output data. Overall, the market momentum is expected to continue albeit with some consolidation next week as the key indices gained 7.6 percent each in the last four straight weeks, and with the last leg of the March 2021 quarter earnings season, the stock specific action could continue, experts feel.
"Markets have been gradually inching higher for the last four consecutive weeks but the underperformance of the banking index is certainly a cause of concern. However, contribution by index majors from the other sectors like energy, IT, healthcare and metal is encouraging, which is not only capping the damage but also helping the index to inch higher," said Ajit Mishra, VP Research at Religare Broking.
He further said, "Going ahead, we feel banking contribution would be critical to help Nifty test the next milestone of the 16,000 mark. We reiterate our bullish view and suggest continuing with the buy on dips approach."
With the beginning of the monsoon season, the market is also expected to monitor the progress of the monsoon in the coming weeks.
Here are 10 key factors that will keep traders busy next week:
Overall, the March quarter earnings season has been strong with positive management commentaries from corporates. In the coming week, more than 200 companies will release their quarterly scorecard including Coal India, Power Finance Corporation, Power Grid Corporation of India, and NTPC.
Among others, LIC Housing Finance, BF Utilities, Greenply Industries, IDFC, Indian Overseas Bank, JB Chemicals, Satin Creditcare Network, Easy Trip Planners, Jubilant FoodWorks, RITES, Jammu & Kashmir Bank, Natco Pharma, Novartis India, Gujarat Fluorochemicals, HT Media, Insecticides India, and Vakrangee will also declare results next week.
Receding New Coronavirus Cases
The fear of the second COVID wave seems to be gradually easing day after day as the country consistently added less than 1 lakh cases for the fifth straight day.
The positivity rate further dropped to 4.39 percent from 5.78 percent on a week-on-week basis. The active cases count also declined significantly to 10.8 lakh, compared to 15.55 lakh in the same period.
On the other side, the recovery rate improved further to 95.97 percent against 93.38 percent in the previous week, while the mortality rate remained steady at 1.25 percent.
The vaccination drive has gradually been gaining pace as more than 34 lakh doses were administered in the last 24 hours ended at 8 am on Saturday, taking the total to 24.96 crore COVID vaccination doses having administered so far.
Fed Rate Decision
Globally, the markets will closely watch the outcome of the two-day US Federal Reserve meeting on June 16.
"US FOMC meet would keep market volatile though they have already hinted at keeping interest rates to near-zero levels in order to aid the recovering economy. Any development on the same would be keenly awaited. Nevertheless, at the current juncture, increase in rates and tapering fears appear muted, with the US 10-year Treasury yield already hovering near the bottom end of its recent range," said Nirali Shah, Head of Equity Research at Samco Securities.
The US Dollar index, which measures the value of the dollar against a basket of six major currencies, continued to hover in the range of 90.00-90.50, while the US 10-year Treasury bond yield dropped to around 1.45% from 1.70% on a month-on-month basis despite likely rise in inflation going ahead.
The FII flow will also be keenly monitored as foreign investors returned to India with a net inflow of Rs 4,788 crore in June so far. In fact, there has been healthy buying by them from the second half of May.
FII flow is one of the key reason for the 7.6 percent rally in benchmark indices and double-digit gains in broader markets in the last four weeks.
Economic Data Points
CPI and WPI inflation for the month of May will be released on Monday, while Balance of Trade data for May will be announced on Tuesday.
Deposit and bank loan growth for the fortnight ended June 4, and foreign exchange reserves for the week ended June 11 will be released on Friday. On the same day, Monetary Policy Meeting Minutes of recent policy meeting held during June 2-4 will also be released.
After some quiet weeks, the primary market will be getting busy next week as four IPOs (initial public offerings) - Shyam Metalics, Sona Comstar, Dodla Dairy and KIMS Hospitals are lined up in the coming week.
Blackstone-backed automotive technology company Sona BLW Precision Forgings (Sona Comstar), and Shyam Metalics & Energy will open their public issues on June 14, to raise Rs 5,550 crore and Rs 909 crore respectively. Both issues will close on June 16.
The price band for Sona Comstar has been fixed at Rs 285-291 per equity share, and Shyam Metalics at Rs 303-306 per equity share.
The public issues of TPG-backed dairy company Dodla Dairy and General Atlantic-backed Krishna Institute of Medical Sciences (KIMS Hospitals) will open for bidding on June 16 and the same will close on June 18. Dodla will raise Rs 520.17 crore and KIMS will mop up Rs 2,143.74 crore via IPOs.
The dairy company has fixed a price band for its public issue at Rs 421-428 per share, and KIMS at Rs 815-825 per share.
The Nifty50 traded higher throughout the session on Friday to gain 61.60 points and formed a Doji pattern on the daily charts as the closing was near its opening levels, indicating indecisiveness among bulls and bears. The index gained 0.8 percent during the week and formed a small bullish candle on the weekly scale.
Given of the rally for the last four consecutive weeks, experts feel the index could be gradually marching towards 16,000 mark but they seem to be uncomfortable with the weakness seen in banks. Bank Nifty was down 0.7 percent during the week, to close at 35,047.40.
"Since the last couple of weeks, we have been mentioning how there is no major hurdle seen before 16,000 and in line with this, the Nifty has been continuing its rally. But the kind of price action we witnessed during the week (especially in the banking space), it's not giving us comfort now. Hence, if the benchmark has to reach this milestone of 16,000 and even move beyond it, the Bank Nifty needs to surpass the sturdy wall of 36,000," said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking.
"If it fails to do so then we may see some bouts of profit booking in the forthcoming week. The key support is to be seen at 15,700 – 15,550 for Nifty; whereas 15,850 – 15,900 are to be considered as immediate resistances," he added.
F&O Cues & VIX
On the weekly options front, maximum Call open interest was seen at 16000, 15800 and 16200 strikes, while the maximum Put open interest was seen at 15000 strike, followed by 15700 and 15800 strikes.
Call writing was seen at 16200, 16000 and 16500 strikes with Call unwinding at 15700 strike. Put writing was seen at 15000 strike, followed by 15800 and 15500 strikes. Option data indicated that the Nifty could see an immediate trading range of 15,500 to 16,000 levels in coming days.
"On the options front, the highest option concentration is placed at 15800 Call and 15700 Put strikes with more than 30 lakh shares each and combined premium of Rs 150. The current open interest is significantly lower compared to the last few weeks as volatility has declined significantly and risk aversion is visible among option writers. Hence, positive bias can continue with stop loss near 15,550," said ICICI Direct.
The volatility index declined further and moved down to 14.10 levels, the lowest level since February 20, 2020. "With the upcoming FOMC meet during the week, a round of upsides in the volatility index cannot be ruled out. Such low levels also suggest some caution in the market, which may result in extended consolidation in the index," said ICICI Direct.
Here are key corporate actions taking place in the coming week:
Here are key global data points to watch out for next week: