Market participants will also track fallout of a trade war between the US and China
It was a perfect photo finish for D-Street on Friday when the market staged a smart pullback ahead of Prime Minister Narendra Modi’s economic review meeting. Investors were possibly anticipating some decisions or commentary from the government to shore up the rupee versus the dollar and address concerns on rising fuel prices.
Last week, the Nifty raced past 11,500 and ended the session above that mark. This is contrary to the negative moves that the market had in the first couple of days of the week.
Better consumer and wholesale inflation data added to the positive sentiment last week. In global news, the Turkish central bank hiked interest rates to 24 percent to boost the lira.
A combination of factors, along with possible short covering by traders propelled the market to crucial levels.
At the close of market hours on Friday, the Sensex ended up 372.68 points, or 0.99 percent, at 38,090.64. The Nifty closed 145.30 points, or 1.28 percent, higher at 11,515.20. The market breadth was positive as 1,797 shares advanced against a decline of 834 shares, while 183 shares remained unchanged.
Week-on-week, the Sensex and Nifty ended lower by around a percent each. In the first half of last week, high crude prices and weak macros weighed on indices.
This week, investors will keep an eye on IRCON International's public offer, crude oil prices and rupee movement against the dollar. Market participants will also track fallout of a trade war between the US and China, which has managed to spook the market.
Here are 10 factors that will keep D-Street on its feet:Outcome of PM Modi's economic review
The government on Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for foreign portfolio investors and curbs on non-essential imports to contain the widening current account deficit (CAD), which has widened to 2.4 percent of GDP in April-June, and check the rupee’s fall against the dollar.
The decisions were taken at a meeting chaired by Prime Minister Narendra Modi to review prevailing economic issues. These measures are likely to have a positive impact to the tune of $8-10 billion, a top Finance Ministry official said.
In addition, the government on Saturday reaffirmed its intent to walk the talk on fiscal discipline (to strictly maintain a 3.3 percent fiscal deficit target for FY19), amid heightened optimism that the economy is poised to move into a faster lane, but steered clear of committing any measures to contain fuel prices despite growing public pressure.IRCON International IPO
The initial public offering of IRCON International will open for subscription on September 17 at the price band of Rs 470-475 per share. This would be the ninth company coming out with a public issue this fiscal. It would be the second company coming out with an IPO under the government's divestment programme.
The public issue comprises an offer for sale of 99,05,157 equity shares by The President of India, acting through the Ministry of Railways. A discount of Rs 10 per share on the offer price will be offered to retail investors and eligible employees.
IDBI Capital Markets & Securities, Axis Capital, SBI Capital Markets are the book running lead managers to the issue.Rupee movement versus the dollar
Investors will keep an eye on the movement of the rupee versus the dollar this week. The depreciation in the currency has been one of the major factors that played on the market last week.
Multiple factors such as a sell-off in emerging market currencies, weaker trade and current account deficit data for July along with higher crude prices weighed on the currency. It fell to a record low of 72.92 per dollar last week.
In the last two trading sessions, talk of a possible government intervention to shore up the rupee, led to a recovery in the dollar-rupee. Traders believe that a short covering rally that was witnessed in the rupee could also be under question this week.Crude prices
The street will keep a close watch on crude price movements. The commodity was threatening to touch $80 per barrel-mark over the course of last week.
Rising crude oil prices poses a concern for a nation like India, which relies heavily on imports to meet its fuel requirements. A rise in prices will increase India's energy bill, leading to a strain on fiscal deficit and other key financials.
A conundrum that India is facing pertains to Iran, a key supplier of oil to India. However, with the US imposing sanctions on Iran, which come into effect from November, India stares at a supply problem from Iran.
According to a Reuters report, India’s loadings from Iran for this month and next will drop to less than 12 million barrels each after purchases over April-August had been boosted in anticipation of reductions.
Investors will keep an eye on the trade war between China and the US, which have been at loggerheads over the past few months. Both nations have been imposing import tariffs on billions of dollar worth of goods and threatening global trade as well.
US President Donald Trump said he is under no pressure to strike a deal with China, amid new tariffs, is likely to keep the market in check. After several bouts of tariffs being imposed, there was market chatter about possible talks between the nations to put an end or at least resume talks on the issue.Global cues
Investors will keep a watch on several data points from multiple nations over the course of next week. For instance, they may make a note of euro area inflation for August on September 17, followed by US housing data and euro’s current account balance on September 19.
This will be followed by Euro Area Flash Consumer Confidence for September on September 20 as well as initial jobless data for the ongoing month. Lastly, Japan will be declaring its inflation numbers for August on September 21, while the US Markit flash PMI and Euro PMI will be announced on September 21.Technical factors
The Nifty saw sustained buying on Friday, extending its gains above the psychological 11,500-mark. The index formed a 'Hammer' pattern on weekly charts.
After a sharp weakness in the last couple of weeks, the upside bounce in the last two sessions could indicate possibility of a comeback for the bulls, as per smaller and a larger timeframe charts, analysts at HDFC Securities said in a report.
“A decisive sustainable move above 11,605 levels this week could confirm further upside in the market, which could result in fresh highs for the Nifty in the next few weeks. Failure to sustain above 11,600 levels is likely to trigger weakness from the highs. In such a circumstance, the market could revisit the recent swing low of 11,250 levels, over the next few weeks,” the report added.Corporate action
Investors are likely to keep an eye on corporate action this week. For instance, several companies will go ex-bonus as well as hold their annual general meetings (AGMs).
Companies such as Akshar Chemicals, Fine Organics, Vipul, Salasar and Midhani, among others will be having their AGMs as well as go ex-dividend.
Additionally, firms such as VIP Clothing, Ballarpur Industries, Revathi, Bhushan Steel, Zenith, Max India, Gokul Agro, Adhunik Industries, Hubtown, Eros Media, Lovable, Indostar and Digjam, among others, may be in focus on the back of their AGMs lined up this week.FII dataForeign institutional investors (FIIs) have been net sellers to the tune of Rs 4,172 crore so far, while buying is back among domestic institutional investors (DIIs). The latter have purchased shares to the tune of Rs 2,169.25 crore in September so far. As such, participants are wary of a sell-off by global investors should the US Federal Reserve increase key interest rates.
Stocks in news
Alembic Pharma: The company received US FDA approval for Alogliptin and Metformin Hydrochloride Tablets, which are used to treat diabetes.
Ashok Leyland: The firm won an order for 200 single decker buses in Bangladesh.
Reliance Industries: Subsidiary Reliance Retail Ventures (RRVL) purchased an additional stake of 3.10 percent equity holding in Genesis Colors (GCL) for a consideration of Rs 8.39 crore, taking its total stake in GCL to 19.63 percent. The aggregate equity shareholding of RRVL and Reliance Brands in GCL stands at 69.10 percent.
Infosys: Meeting of the board of directors of the company is scheduled on October 16 to consider audited consolidated financial results of the company and its subsidiaries as per Indian Accounting Standards (INDAS) for the quarter and half year ending September 2018.
Infosys: Company to acquire Fluido, the largest salesforce consulting partner in Nordics for up to 65 million euro.
Wipro: Wipro Gallagher Solutions and Mercury Network to jointly offer loan appraisal management platform.
Century Textiles & Industries: Board has appointed RK Dalmia as a Whole-time Director of the company for a period of three years; Snehal Shah has been appointed as a Chief Financial Officer of the company in place of RK Dalmia.
MEP Infrastructure Developers: Toll Tax Department extended period of suspension of collection of toll tax from any of the specified commercial vehicle till September 30, 2018 owing to pending of completion of installation of Radio Frequency Identification Device (RFID) work. The settlement of claims, if any, will be dealt as per the provisions of the Contract Agreement executed with the authority.
Gammon Infrastructure Projects: Patna Buxar Highways (PBHL), erstwhile a wholly owned non-material unlisted subsidiary of the company which was sold on March 31, 2016 with the company's rights to future claims pending under arbitration, has received an amount of Rs 14.70 crore on September 14, 2018 from the National Highways Authority of India in compliance of the order passed by the Delhi High Court.
Tantia Constructions: M L Agarwala resigned from the board of company.
Uday Jewellery Industries: Company has started export of its speciality jewellery and has completed its first export.
Modern Steels: As the company's Account is NPA with Punjab National Bank, company will settle the dues to PNB by paying Rs 30 crore.
Future Supply Chain Solutions: Voltas JV Voltbek partners with the company; company to manage pan-India supply chain network for the consumer electronics giant.
Yes Bank: Board approved the final terms and conditions along with the coupon rate of issue of 30,420 rated, listed, non-convertible, redeemable, unsecured, Basel III compliant Tier 2 Bonds, in the nature of debentures, of Rs 10,00,000 each aggregating nominal value of Rs 3,042 crore.
Rural Electrification Corporation: Q1 profit jumps to Rs 1,468.70 crore versus Rs 1,075.96 crore and revenue increases to Rs 5,738.6 crore versus Rs 5,626.85 crore (YoY).
Sterlite Technologies: Company will be making an addition of 15 million fibre km to its optical fibre cabling capacity, doubling it to 33 million fibre km. The enhanced capacity is expected to come on-line by June 2020 in a phased manner.
KPIT Technologies: Post the jury verdict, both Sparta and Copart raised several issues for the Court. The Court has given a ruling on some of the issues, as a result of which Sparta's net liability has been reduced from approximately $16 million to approximately $8 million. The ruling on other issues is still awaited. Sparta would have a further right to appeal the Court's order.
Lupin: Board appointed Dr Sharma as advisor to the company, for a period of one year effective October 1, 2018 and in position as Vice-Chairman in non-executive capacity.
Linde India: Board has given in-principle approval for divestment of certain assets of the company; approves Ring Fencing and hold separate obligations in relation to divestments assets; and approves appointment of an independent financial advisor to conduct the sale process for the divestment assets.
Shree Rama Newsprint: Cooling tower of power plant collapsed in afternoon on Sunday.The entire plant is shut.
Amrit Corp: The shareholders of the company in the 77th Annual General Meeting approved the re-appointment of Shri Ashwini Kumar Bajaj as Managing Director for a further period of 3 years.
Chembond Chemicals: Company has acquired additional equity shares via transfer of shares from existing shareholders in its associate Chembond Distribution (CDL), thereby increasing the company's shareholding from 47 percent to 100 percent. Post transaction, CDL will become wholly owned subsidiary of the company.
Sadhana Nitro Chem: Meeting of the board of directors of the company is scheduled to be held on September 24 to consider the proposal of sub-division / stock split of equity shares.
Sanghi Corporate Services: Company has surrendered NBFC license to Reserve Bank of India.
G D Trading & Agencies: Company received order from RBI for voluntary cancellation of NBFC Certificate.
Gammon India: The Court of Monza, Italy has declared the bankruptcy of the company's step down subsidiary 'SAE Powerlines S.r.l' (which is held through ATSL Holdings BV).
Alok Industries: State Bank of India has withdrawn the nomination of Atanu sen from the board of directors of the company.
Dynemic Products: Company has received an environment clearance for its unit III project located at Dahej in Bharuch.
Vikas Granaries: Company has planned to manufacture proppants and mining of granite and fractured debris near Jodhpur. It has given on contract 200 bighas land for mining to remove fractured debris from the ground upto 10 meters depth for a sum of Rs 29.81 crore. These revenues would be accrued during second and third quarters of FY 2019. The remaining land of approximately 100 bighas would be given for mining of fractured debris in times ahead. The estimated value of these debris is about Rs 14.90 crore.
TCI Express: ICRA reaffirmed its credit rating in respect of the company's commercial paper programme.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.