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Week Ahead: Top 6 factors that are likely to chart market direction this week

Rising geopolitical concerns amid mixed bag results from India Inc. capped upside for the markets as Nifty50 closed 0.34 percent lower for the week ended 21 April. Coming week unlikely to be any different as D-Street await results from index heavyweights.

April 22, 2017 / 07:40 PM IST
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Rising geopolitical concerns amid mixed bag results from India Inc. capped upside for the markets as Nifty50 closed 0.34 percent lower for the week ended 21 April. The Nifty50 closed marginally lower for third consecutive week suggesting indecisiveness among bulls as well as bears.

The coming week is unlikely to be any different as D-Street await results from index heavyweights such as Reliance Industries, Wipro, Kotak Mahindra, Maruti Suzuki, etc. among others.

The Indian market has shown a lot of resilience this past week as it refused to go down below its crucial support level of 9,100. The index dipped below 9,100 in intraday trade in 4 out of 5 trading session but managed to close it showing a mark of strength.

Most analysts are of the view that as long as the index stays above 9,000 on a closing basis, the trend both from a short to medium-term perspective remains on the upside.

On the higher side, the index is likely to touch 9,300-9,340 in the next two or three weeks if 9000 remains intact.

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We bring you list of 6 factors which are likely to chart the direction of the market this coming week:

April F&O Expiry:

The market will remain volatile as traders roll over positions in the futures & options (F&O) segment from the near month April 2017 series to May 2017 series. The near month April 2017 derivatives contract expire on Thursday, 27 April 2017.

“On the data front, open interest in Nifty futures witnessed a secular declining trend throughout the series. The current open interest is almost 20 percent lower compared to open interest seen in the March series at the same point of time,” ICICI Securities said in a report.

“In the options space, the 9000 Put strike remains the highest base. Downsides below these levels are not expected in the Nifty. On the higher side, fresh additions were seen at ATM 9,200 Call strike. Thus, a move above 9,200 is likely to prompt the short covering movement in the index towards settlement,” it said.

RIL Q4 results:

Reliance Industries Ltd (RIL) will be in focus as it declares its results for the quarter ended March 31 post market hours on Monday. RILs' fourth-quarter earnings are expected to be steady to strong as higher petchem profitability may drive sequential operational improvement.

Petchem segment should benefit from strong cracker margins, analysts believe. According to the average of estimates of analysts polled by CNBC-TV18, gross refining margin during the quarter is expected to be at USD 10.90 a barrel against USD 10.80 a barrel in the previous quarter.

Macroeconomic Data:

Market participants will also keep an eye on macroeconomic data such as Infrastructure output data, foreign reserve, bank deposit growth as well bank loan growth will be released on April 28, Friday.

India's annual infrastructure output growth slowed to 1.0 percent in February, the lowest level in at least 13 months, government data showed on Friday. Overall output grew an annual 3.4 percent in the previous month.

French Elections:

Security concerns took center stage on Friday after shooting in Paris killed one policeman ahead of the polls. Voters will cast ballots in the first round on Sunday of what has turned into the most unpredictable French election. The two candidates who get the most votes will then face off in a run-off election on May 7.

“In the coming week, the focus will be on France, where voters are heading to the polls Sunday to choose their next president. France is the second-largest economy in the euro-zone and one of the seven biggest across the world,” Vijay Singhania, Founder-Director, Trade Smart Online told Moneycontrol.com.

“With the run-off of elections scheduled for May 7, it is expected that a new President will be formally confirmed by May 11. France uses the two-round voting system where a leader can be elected this Sunday if they win an outright majority but the polls suggest that this is unlikely, a run-off between the two leading candidates is expected and is scheduled for May 7,” he said.

Nearly 100 companies to report Q4 results:

Nearly 100 companies will report their results for the quarter ended March 31 this coming week which include index heavyweights such as Reliance Industries, Wipro, Kotak Mahindra, Maruti Suzuki, etc. among others.

Other companies which will report results for Q4 include names like Indiabulls Housing Finance, UltraTech Cements, Can Fin Homes, IDFC Bank, Indian Bank, Persistent Systems, KPIT Technologies, KSB Pumps, Tata Sponge, Biocon, Indiabulls Real Estate, Syngene International, Tata Elxsi, Ambuja Cements, CEAT, Aditya Birla Money etc. among others.

Technical Outlook:

As per moving averages, the Nifty50 index is still above its short term moving averages and that is the where it is finding a lot of support around 9,050 levels. The resistance is still around 9,220 – 9,230 where analysts’ are seeing a distribution pattern emerging.

“Going into next week, a range breaks out may further decide the trend though the bullish is bias may continue and any decline towards short term averages may see higher volumes and initial buying set up,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.com.

“A possible downside can be of marginal 1 percent with support at 9,000 and resistance at 9,300 in the coming week. Below 9,000 we may see a slide to 8,850 – 8,900,” he said.

Nadeem further added that as per candlestick reading, indecisiveness is seen on charts with candle patterns showing a small body indicating a range may be seen in the continuation or a breakout may be near.

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