There could be lot of volatility in the coming week as March future & options contracts will be expired on Wednesday and positions will be rolled over to next month.
The war between world's top two largest countries US and China over trade tariff, which may hit investments and result in economic slowdown, jolted stock markets globally in the week gone by as Indian benchmark indices lost nearly 2 percent while global counterparts like Japan's Nikkei, Dow Jones and S&P 500 plunged 5-6 percent each.
The 50-share NSE Nifty closed below the psychological 10,000-mark for the first time since October 2017, correcting 10.5 percent in two months from its record high of 11,171.55 seen on January 29, 2018.
About Rs 3.9 lakh crore worth of investors' wealth eroded in the past week and total Rs 15.8 lakh crore worth of wealth since January 29, 2018.
The sharp fall was largely led by banks and metal stocks. The Nifty Bank shed 3.3 percent and PSU Bank lost 7.4 percent while Metal index slipped 6 percent.
So the sentiment, which has been negative due to domestic as well as global reasons, is likely to continue to sour in the coming truncated week, especially after more than another 400 points correction in Dow Jones on Friday.
On top of that there could be lot of volatility as March future & options contracts will be expiring this week and positions will be rolled over to next month. But there is a possibility of a bit of short covering due to steep correction in the past.
"Markets have been facing headwinds since the start of February, be it the imposition of Long term capital gains or the much talked about banking fraud. This being a politically busy year in India, volatility can stay high for an extended period," Devang Mehta, Head – Equity Advisory, Centrum Wealth Management said.
As they say “Volatility is friend of long-term investors”, this opportunity should be used by the participants to accumulate quality businesses at reasonable valuations, he advised.
Hemang Jani, Head - Advisory, Sharekhan said as the uncertainty remains on the possible retaliatory action from China and other EU countries markets would remain on the edge.
"We are not expecting any major revival in the short run," he added.
The coming week is a truncated one as the markets will remain shut on Thursday for Mahavir Jayanti and Friday for Good Friday public holidays.
Here are 10 key things that will keep traders busy in the coming truncated week:
US-China Trade War
As a part of protectionism, President Donald Trump on Thursday signed a memorandum to implement tariffs on up to USD 60 billion in imports from China. The tariffs largely focus on technology sector goods and were intended to penalise China for, according to the Trump administration, stealing intellectual property.
In response, China on Friday proposed a list of 128 US products as potential retaliation targets, according to a government statement.
Beijing's ministry said it will take measures against the 128 US goods in two stages if it cannot reach an agreement with Washington, adding that it could also take legal action under World Trade Organization rules.
Earlier this month, Trump had signed off on tariffs on steel and aluminum imports, although several countries were exempt. Markets are worried that subsequent retaliatory actions from US trading partners could result in a trade war, reports CNBC.
Crude Oil
Crude oil prices rallied more than 5 percent during the week despite turmoil in global equity markets on trade war concerns. The upside was after the Saudi Energy Minister Khalid al-Falih said OPEC members would need to continue coordinating with Russia and other non-OPEC oil-producing countries on supply curbs in 2019 to reduce global oil inventories.
Brent crude futures closed the week at USD 70.4 per barrel and US crude futures settled at USD 65.88 a barrel.
Global analysts expect less impact of trade war on crude oil as they feel there could be healthy demand going forward. Morgan Stanely expect Brent crude oil prices at around USD 75 a barrel by Q3CY18 while Goldman Sachs see prices at around USD 82.50 a barrel by mid-year, reports Reuters.
For the country like India, however, it is very painful as we import more than 80 percent of oil. So any major increase in oil prices generally hits fiscal deficit and pushes inflation higher.
Auto Stocks
Auto stocks will be in focus on Wednesday, the last day of truncated week, ahead of the automobile companies declaring their March sales data on Sunday, April 1.
Analysts largely expect the growth in two-wheeler, passenger and commercial vehicles to continue.
"Interactions with leading channel partners indicate continued demand momentum across segments. This is supported by festive demand (Gudi Padwa and Chaitra Navratri) in key northern, central and western markets in March 2018," Motilal Oswal said.
"Commercial vehicles will continue to see healthy wholesales, on high base of last year, as demand continues to outstrip supply. Passenger vehicles retails are healthy, led by Maruti Suzuki. M&M's retails are growing at 8-10 percent in rural regions. Two-wheeler demand for 100-125cc motorcycles remains robust, with average retails growing more than 15 percent," the research house explained in its report.
Macro Data
Government Budget value till the month of February 2018 for the year FY17-18 will be announced on Wednesday after market hours. So far, fiscal deficit widened to Rs 6.77 lakh crore in April-January 2017-18 against Rs 5.64 lakh crore in the same period of the last fiscal year.
Foreign exchange reserves for the week ended March 23, bank loan & deposit growth for the week ended March 16, infrastructure output for the month of February and external debt for Q4FY18 will be announced on Friday.
F&O Expiry
The last expiry of the financial year 2017-18 will take place on coming Wednesday, one day prior to the normal expiry day of Thursday due to couple of holidays ahead.
This expiry is going to keep market volatile in the coming week, on top of global weakness due to trade war worries.
The Nifty encountered resistance at 10,200 in the passing week and finally slipped below the highest Put base of 10000.
"As the Nifty has come closer to the highest Put base of 10000, some consolidation may be seen in the upcoming truncated week," ICICIdirect said.
"The Call writing seen at 10200 strike may not let the index move above this strike even if some short covering is seen in it. However, if the Nifty recovers above 10050, some short covering may be seen in the settlement week," it added.
Technical Outlook
The Nifty50 closed below its crucial support level of 10,000 levels for the first time since October 11, 2017, which does not auger well for the bulls. However, technical chartists suggest that the downside still remains fairly limited and investors should avoid making fresh short positions.
Now analysts expect the market to move towards 9,900 levels, before seeing pullback to around 10,000 levels.
"In terms of Elliott Wave Theory, Nifty is witnessing wave extension on the downside, which means further downside over next few sessions," Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan said.
Jayant Manglik, President, Religare Broking also said besides, the breakdown of major psychological support at 10,000 will further add to the worries. "Traders have no option but to stay with the trend and use bounce to create fresh shorts. Nifty has next support at 9,900."
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol that if this support zone of 9,950–9,918 is decisively breached then traders should look for downside targets of 9,700 levels.
Corporate Action
Stocks in Focus
Tata Power signs share purchase agreement with Tata Sons to sell 59 crore shares in Panatone Finvest. The agreement is valued at Rs 1,542.6 crore.
Unitech: HDFC has invoked 6.5 crore shares of the company pledged by promoter Sanjay Chandra.
Jain Irrigation: Promoter created pledge on 13.5 lakh shares on March 12.
HCL Technologies has transferred entire stake in arm HCL Training to another arm HCL Comnet.
NHPC has commissioned 50 MW solar power project in Theni, Tamil Nadu.
Reliance Industries has inked a deal to combine over-the-top (OTT) music platform Saavn with its own digital music service JioMusic in a transaction worth over USD 1 billion. JioMusic’s implied valuation for the transaction was USD 670 million. The company will invest an additional USD 100 million towards making the combined platform one of the largest music streaming services in the world. According to CNBC-TV18 report, Reliance Jio's board members have approved raising up to Rs 20,000 crore via debentures.
Indiabulls Real Estate has divested 50 percent stake in arms Indiabulls Properties (IPPL) & Inidabulls Real Company (IRECPL) to Blackstone for an enterprise value of Rs 9,500 crore. Substantial part of sale proceeds will be used for debt payment & growth.
Uttam Galva Steels - ArcelorMittal has got approval from exchanges to change its 'promoter' status in Uttam Galva Steels, giving it a huge boost ahead of the second round bidding for Essar Steel.
Viceroy Hotels: Corporate Insolvency Resolution Process (CIRP) has been initiated in respect of the company, Hyderabad under the provisions of Insolvency and Bankruptcy Code by an order of National Company Law Tribunal with effect from March 12, 2018. Te powers of the board of directors of the company stands suspended and such powers will be vested with Karuchola Koteswara Rao appointed as the interim resolution professional.
Fortis Healthcare: Shareholding of BlackRock Inc in the company has moved above 5 percent.
SRF: DSP BlackRock MF's shareholding in the company increased to 5.14 percent on March 21.
Va Tech Wabag has incorporated a subsidiary company in the name of 'VA Tech Wabag Brazil Servicos DE AGUA E SANEAMENTO LTDA.
Precision Camshafts subsidiary PCL (International) Holding BV acquired 76 percent shareholding in MFT Motoren und Fahrzeugtechnik GmbH, Germany.
Marathon Nextgen Realty has fixed April 6 as record date for split of face value of the equity shares of the company from existing Rs 10 each to Rs 5 each.
GOCL Corporation has fixed April 6 as the record date for the purpose of payment of interim dividend.
Capital First said the meeting of the debenture committee of the company will be held on March 28 to consider and approve the private placement of rated, listed, secured / unsecured / perpetual, redeemable non-convertible securities in the nature of debentures to be listed on the Debt Market segment of National Stock Exchange of India Limited.
Tata Chemicals board has approved the scheme of amalgamation for the merger of Bio Energy Venture 1 (Mauritius) Pvt Ltd, a wholly owned subsidiary of the company, with the company.
Mercator board approved the issue of 1,750 secured redeemable unlisted non-convertible debentures of face value of Rs 10,00,000 each, aggregating to Rs 175 crore on private placement basis.
Kridhan Infra acquired 36.86 percent stake in Vijay Nirman Company Private Limited. It had signed an SSA for increasing its stake to 50.5 percent.
Huhtamaki PPL has entered into a business transfer agreement for acquisition of the business of Ajanta Packaging, India on a slump sale basis, based on an enterprise valuation of Rs 100.3 crore. This acquisition will help the company in consolidating its position in pressure sensitive label business.
Bharat Financial Inclusion assigned two pools of receivables of an aggregative value of Rs 1,391 crore with a leading public sector bank and a leading private sector bank on direct assignment basis. With these transactions, the company has completed six direct assignment transactions worth Rs 3,328.32 crore in FY18.
NMDC Board will, on March 26, consider declaration of interim dividend for the financial year 2017-18, if any.
Shoppers Stop: CRISIL has upgraded their rating on the Rs 100 crore commercial paper of the company from 'A1' to 'A1+'.
Lumax Auto Technologies board approved sub-division of equity shares of the company from Rs 10 per share to Rs 2 per share.
Lenders to Jyoti Structures will meet on Monday to put the only resolution bid received for the debt-laden company to vote: Mint.
A draft defence production policy proposes to increase the FDI cap in niche technology areas to 74 percent under the automatic route: Mint.
Seven companies have shown interest in acquiring Lanco Infratech: ET
SFIO probes Fortis Healthcare, Religare Enterprises for alleged frauds
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
IPO & Listing
Lemon Tree Hotels will open its initial public offering of 18,54,79,400 equity shares for subscription on March 26 and will close on March 28. The company has garnered Rs 311.60 crore from anchor investors on Friday, one trading day before the issue opens, by issuing 55,643,820 shares at higher end of price band of Rs 54-56 per share.
After the Rs 4,473-crore public issue subscribing 14.6 times, Bandhan Bank will list on exchanges on Tuesday while Hindustan Aeronautics is expected to debut on bourses on Wednesday after the Rs 4,229-crore issue subscribed 99 percent.
ICICI Securities, which has been subscribed 36 percent so far, will close its Rs 4,017-crore initial public offering on Monday.
Global Cues
The US' Q4 GDP, pending home sales, crude oil inventories data will be released on Wednesday while UK Q4 GDP, Germany's preliminary CPI and US' unemployment claims data will be unveiled on Thursday.