Dalal Street Week Ahead: Here are 10 Key Factors that will Keep Traders Busy Next Week
Equity benchmarks, as well as the broader markets, recouped all the previous week's losses in the week ended October 23 as bulls were back in action. The BSE Sensex rallied 702.52 points or 1.76 percent to 40,685.50 and the Nifty50 rose 167.90 points or 1.43 percent to 11,930.35, while the Nifty Midcap index gained 3 percent and Smallcap was up 2.65 percent during the week.
Nirali Shah, Senior Research Analyst at Samco Securities said "Going ahead, Mr. Market is expected to continue its upbeat mood as indices are oscillating around their all-time highs. India Inc with its quarterly performance has managed to keep the markets afloat and on lack of any negative news, indices are likely to inch higher."
Investors are advised to wait and watch and buy on healthy declines, she said.
On the coming Monday, the market will first react to Yes Bank, Nestle India, and Tech Mahindra's quarterly earnings, though these stocks do not have major weightage in the benchmark indices.
Here are some key factors that will keep traders busy next week:
September Quarter Earnings
The most prominent stocks are Kotak Mahindra Bank, Bharti Airtel, Tata Motors, Axis Bank, Dr. Reddy's Labs, Hero MotoCorp, Larsen & Toubro, Titan Company, ICICI Bank, Maruti Suzuki India, Reliance Industries, BPCL, IndusInd Bank, IOC, Bank of Baroda, Canara Bank, Havells India, Vodafone Idea, InterGlobe Aviation, Angel Broking, Finolex Industries, JM Financial, M&M Financial Services, SBI Life Insurance Company, Torrent Pharmaceuticals, Amara Raja Batteries, Ceat, ICICI Prudential Life Insurance Company, Nippon Life India Asset Management, AU Small Finance Bank, Blue Star, Cummins India, ICICI Securities, Marico, Max India, MCX, MOIL, PNB Housing Finance, RBL Bank, Route Mobile, Thyrocare Technologies, UTI Asset Management Company, JK Paper, Shriram Transport Finance, Tata Chemicals, TVS Motor Company, Welspun Corp, Dixon Technologies, DLF, Jindal Steel & Power, Max Financial Services, Motilal Oswal Financial Services, UPL, DCB Bank and IDFC First Bank.
HDFC Bank is expected to be in focus next week as Sashidhar Jagdishan will take over the responsibility of the country's largest private sector lender on October 27. Aditya Puri, who has been working as Managing Director and Chief Executive Officer, will get retired on October 26. Sashidhar Jagdishan has been appointed the new Managing Director and Chief Executive Officer of the bank for the next three years.
The risk of coronavirus cases has been declining week-after-week, which provided strong support to the market. The active COVID-19 cases fell below the 7 lakh mark for the first time in nearly two months and the recovered cases are 10 times higher over active cases now. The recovery rate was around 90 percent on Friday against 88 percent last week, while the fatality rate remained around 1.5 percent, the lowest among the most impacted countries. On the vaccine front, the report indicated that Bharat Biotech's Covaxin has received approval for Phase III clinical trials, which renewed hopes for a vaccine. But the spike in cases in the United States and some European nations raised worries over global growth, hence, it will be closely watched in the coming week.
The US presidential elections, which are scheduled to be held on November 3, would be a key factor to watch out for globally and there could be a bit of volatility in the markets. Given the sudden increase in COVID-19 cases in the US, which hit at a record rise in a single day on Friday, and the fight between both parties over the second stimulus package along with the current economic situation would be key points for discussion ahead of elections.
FII Inflow Continues
FIIs were net buyers to the tune of Rs 7,376 crore in the week gone by (against Rs 1,185.51 crore in the previous week), taking the total net buying to Rs 13,564.74 crore in October, whereas DIIs remained consistent net sellers to the tune of Rs 7,800 crore (against 5,217.47 crore selling in the previous week) in the same period, taking total outflow in September to Rs 15,147 crore.
Economic Data Points
India's foreign exchange reserves hit the lifetime high at $555.12 billion in the week ended October 16, increasing by $3.615 billion, against $551.505 billion seen in the previous week ended October 9, due to a sharp rise in foreign currency assets.
Nirali Shah of Samco Securities said "Foreign exchange reserves soared on account of current account surplus and a steady flow of portfolio inflows. It is quite startling to witness India’s forex reserve double itself from $275 billion back in 2013, which by most standards is considered adequate. Case in point being, the sturdy state of our Indian economy when compared to developed countries where demand revival is quite slow with a resurgence in COVID cases,"
The Nifty50 gained 34 points on Friday and formed a small-bodied bearish candle on the daily charts as closing was lower than opening levels, while it gained 1.4 percent during the week and witnessed a small-bodied bullish candle which also resembles a Spinning Top kind of formation on the weekly scale which indicates indecisiveness amongst participants.
The October futures and options contracts will be expired and the positions will be rolled over to next month on coming Thursday, which could lead the volatility in the coming week. The options data indicates that a Put writing was seen at 11,700, 11,800, and 11,900 strikes where the highest open interest is still placed at 10,500 strikes, and the second-highest open interest is placed at 11,500 strikes. So, the overall option data indicates that the coming week is likely to be more volatile (also due to US presidential elections), while Nifty may oscillate in a broader range of 11,700-12,200, experts feel.