Positive momentum sustained throughout November as bulls retained the upper hand. There was some volatility and rangebound trade in the last week, although the market hit a fresh intraday record high and closed 0.85 percent higher on the Nifty50.
The consistent FII inflow and positive developments on the vaccine front supported the bullish sentiment, helping benchmark indices log double-digit gains during the month. The news on vaccine also raised hopes for global economic recovery, though the COVID-19 subject is expected to remain for coming months.
The BSE Sensex gained 0.7 percent to close at 44,179.72 and the Nifty50 rose 0.85 percent to 12,969 during the week, underperforming broader markets as the Nifty Midcap index was up 4 percent and Smallcap rallied 6.3 percent, which are expected to remain in action in the near-term.
The market will first react to Q2 GDP data which at -7.5 percent was ahead of analysts' estimates but overall the truncated week is expected to see some consolidation after the recent run-up and will look for direction from RBI policy, economic data points and auto sales data due in the week, experts feel.
"Markets are not likely to show significant movement in either direction given that there is very little room for a rate reduction by RBI. Infact markets are expected to enter a holiday mood with no major directional moves in the weeks to come. Stock-specific sectoral rotations are likely to unfold in the near term," Nirali Shah, Senior Research Analyst at Samco Securities told Moneycontrol.
Ajit Mishra, VP - Research at Religare Broking also expects prevailing consolidation to continue in the index, but feels there will be no shortage of trading opportunities in broader markets.
He advised traders to maintain a 'buy on dips' approach while keeping their focus on the selection of sectors and stocks.
The market will remain shut on Monday for Gurunanak Jayanti.
Here are 10 key factors that will keep traders busy next week:
Coronavirus and Vaccine Developments
COVID cases continued to rise in the month of November, more for the western countries than back home.
The recovery rate has remained more or less stagnant at around 93.7 compared to the previous week, but the fatality rate improved a bit further to 1.45 percent from 1.46-1.47 percent last week. Total infections count stood at more than 93.51 lakh with over 1.36 lakh deaths, and the recovered patients so far were 87.6 lakh (as per Johns Hopkins University), which as a result the active cases stood at 4.54 lakh.
Experts feel India remains in a better position compared to the western world which has seen a sharp increase in infections in the second wave. Globally infections count was over 6.17 crore with 14.45 lakh deaths with the United States remaining at the top with 1.31 crore infections and 2.64 lakh deaths.
But the positive developments on the vaccine front with three vaccine candidates (from Pfizer, Moderna and AstraZeneca) reporting success in trials, which raised hopes for early availability of vaccine than later. Prime Minister on November 28 also visited manufacturing facilities of Zydus Cadila in Ahmedabad, Bharat Biotech in Hyderabad and Serum Institute of India in Pune to review the development of coronavirus vaccine work.
The Monetary Policy Committee is scheduled to meet for three days in the coming week and the final outcome will be released by the Reserve Bank of India on December 4. Experts largely expect the status quo with repo rate remaining unchanged at 4 percent and reverse repo rate at 3.35 percent due to inflationary pressures and maintaining accommodative stance, but the key thing to watch out for would be the commentary about growth in coming quarters and next year, along with the announcement of some measures if any, to support the economic revival.
"With the economy remaining on the path of a gradual recovery, and facing sticky supply-side price pressures, we expect the RBI to stay on hold, maintain an accommodative stance, and continue to emphasise that a "durable improvement in growth" is needed before it would relook at policy settings," Barclays said in its note. Banking and financials will be in focus next week.
Burger King IPO
Burger King India, a quick-service restaurant chain, is set to launch its Rs 810-crore initial public offering on December 2 and the same will close on December 4. The issue consists of a fresh issue of Rs 450 crore and an offer for sale of 6 crore shares by promoter QSR Asia Pte Ltd.
The price band has been fixed at Rs 59-60 per share and it would be the fourteenth IPO in 2020.
Auto stocks including Maruti Suzuki, Tata Motors, Ashok Leyland, Eicher Motors, Hero MotoCorp, Mahindra & Mahindra, Bajaj Auto and Escorts will be in focus on Tuesday as monthly volume sales data for November will be released by the company.
The two-wheeler segment is expected to register flat or slightly negative growth, while the performance of passenger vehicle segment may be better than two-wheeler amid festive demand but tractor sales is likely to be robust amid strong kharif sowing, but commercial vehicle sales is likely to be muted though there are signs of recovery, experts feel.
Emkay expects volumes to improve in the coming quarters on strong rural sentiment, low-interest rates, improving finance availability, and a gradual pick-up in the business and economic activity.
The Organization of the Petroleum Exporting Countries (OPEC) and allies are scheduled to meet on November 30-December 1. Crude oil prices already rallied sharply by 28 percent in November ahead of this event in anticipation of additional measures to rebalance the market and the positive developments on the vaccine front. But experts do not expect any aggressive measures given rising cases and uncertainty around vaccine availability.
"OPEC and allies are largely expected to extend the current production of about 7.7 million barrels per day for additional three to six months. The current deal calls for curtailment in production cuts to 5.8 million bpd in January 2021," Ravindra Rao of Kotak Securities told Moneycontrol.
"With a sharp rise in crude prices and signs of progress on the vaccine front, OPEC is unlikely to take aggressive measures. Additionally, there are other challenges in the form of rising virus cases and easing euphoria about vaccine amid efficacy concerns as well as logistical challenges," he said.
Foreign investors net bought Rs 65,300 crore worth of shares in November, the highest ever in a single month, helping the benchmark indices as well as broader markets report double-digit gains in the month.
In the case of week ended November 27, FIIs invested over Rs 19,000 crore of funds into Indian equities. On the contrary, DIIs took the advantage of rally and sold Rs 15,675 crore of shares as they turned cautious given the rally in equities.
Experts feel the FII inflow could slow down in near term given the expected course of fiscal and monetary policy in the US and Europe, but in the long term, India may continue to attract FII money.
The Nifty50 fell 0.14 percent and formed small-bodied bearish candle on the daily charts, while in the week, it gained 0.85 percent and witnessed Doji kind of indecisive formation on the weekly scale after hitting an intraday record high during the week.
Experts expect the rangebound trade to continue in the coming week unless the index surpasses its recent record high of 13,145 levels.
"The ideal range for coming sessions would be 13,150 - 12,730 and till the time we do not breakout outside this range, we are likely to see trades on both sides, especially in indices. Above 13,150, next levels to watch out for would be 13,250 - 13,400 but the move will not be as swift as it has been in the recent past. The real action continues in the broader markets as we can see stellar moves in a lot of mid and small counters," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking said.
The overall option data indicated that the Nifty could remain in a broader trading range of 12,800 – 13,300 for the coming week, while as the volatility is in comfort zone, experts expect bulls to remain in a strong position.
On the derivative front, a fresh Put writing was seen at 12,800 and 12,900 strikes where the highest open interest was placed at 12,900 strike, which is likely to act as immediate support in the coming week followed by 12,800.
On the call side, a huge addition was seen at 13,000 and 13,100 strikes on Friday, where the maximum open interest was placed at 13,000 strikes of more than 32 lakh contracts.
"So, in the coming week if Nifty breaks above 13,000 levels decisively then we can expect a short-covering move towards 13,200 and 13,300 levels," Nilesh Jain of Anand Rathi said.
"The volatility index 'IndiaVIX' is hovering near 20 levels and it is still very much in the comfort zone. It is likely to remain in the range of 16-26, hence bulls are likely to have the upper hand in the market," he added.
Corporate Action and Economic Data Points
Here are key corporate actions taking place in the coming week:
Meanwhile, Markit Manufacturing PMI and Market Services PMI data for November will be released on Tuesday and Thursday, while on the Friday, foreign exchange reserves for the week ended November 27, deposit and bank loan growth for fortnight ended November 30 will be released.
Here are key global data points to watch out for next week: