Market Week Ahead: 10 key factors that will keep traders busy

The market witnessed volatility and ended flat week amid domestic data including weak CPI and WPI numbers. Global markets also put pressure due to increasing fear over the novel coronavirus in China.

India's retail inflation in January stood at 7.59 percent against 7.35 percent seen in December 2019. However, January core inflation was at 4.8 percent versus 3.7 percent in December.

The wholesale price inflation (WPI) for January stood at 3.1 percent versus 2.59 percent during December 2019.

The Sensex was up 115.89 points (0.28 percent) to end at 41,257.74 in the past week, the Nifty was up 15.15 points (0.12 percent) to end at 12,113.5.

This week is truncated with only four trading sessions as the market will remain shut on February 21 on account of Mahashivratri.

"With most of the major events now over, the market will now start focusing on Donald Trump's India visit later this month. In the coming week, the market would focus on export-oriented and automobile related stocks. Technically, the market is heading for the levels of 12,000 or 11,950 levels. On the higher side, 12,200 and 12,250 would be hurdles," Shrikant Chouhan, Senior Vice-President, Equity Technical Research, Kotak Securities, said.

Domestic Institutional Investors (DIIs) sold equities worth of Rs 792.91 crore, while foreign institutional investors (FIIs) bought little over Rs 11 crore.

The BSE large-cap was down 0.20 percent, BSE small-cap index fell 1 percent and the BSE mid-cap index shed 1.53 percent in the past week.

Here are 10 key factors that will keep traders busy this week:

Ambuja Cements earnings

Cement major Ambuja Cement is going to announce its December quarter numbers on February 20.

Kotak Institutional Equities expects company's Q3FY20 net profit is likely to slips by 33.6 percent at Rs 356.9 crore, while the revenue is expected to rise by 10.2 percent at Rs 3,154.3 crore, YoY.

The company may report 47.9 percent jump in its EBITDA at Rs 597.3 crore and margin may increase by 483 bps at 18.9 percent, YoY.

It expects 6 percent volume growth in 3QFY20 led by stronger sales in December partly offset by weaker sales in October and November, while blended realizations is expected to decline by 3.3 percent QoQ led by price declines in Central and West markets.

Edelweiss expect company's profit to jump 43 percent at Rs 371.1 crore and revenue to rise by 9.8 percent at Rs 3,143 crore, YoY.

Coronavirus

Coronavirus, now called 'COVID-19', remains one of the key monitorables for global markets, including India.

Chinese health officials on February 16 said that confirmed cases have jumped to over 68,500. The death toll in China has climbed to 1,665.

Avenue Supermarts' Offer for Sale

The company's Offer for Sale (OFS) opened for non-retail investors on February 14, which was fully subscribed on the first day.

Retail investors are allowed to place bids only on February 17. However, the un-allotted non-retail investors who have place their bids on T day (February 14) and have chosen to carry forward their bids to T+1 day, shall be allowed to revise their bids on T+1 day.

The company announced that its promoters will offload 2.28 percent stake (14.8 crore shares) through the offer for sale (OFS) route as a base price of Rs 2,049 per share. Meanwhile, there is no discount offered to retail investors.

At base price, promoters of the company will be able to mop up over Rs 3,000 crore.

The promoters include Radhakishan Damani, Gopikishan Damani, Shrikantadevi Damani and Kirandevi Damani.

The company has already raised Rs 4,098 crore by offering two crore shares via its qualified institutional placement.

The promoters have been selling their stake through OFS and QIP as they have to comply with minimum shareholding norms and to bring down the stake to 75 percent by March 31, 2020.

Kotak securities Limited, Axis Capital Ltd, DSP Merill Lynch, HSBC securities, IDFC securities, JM financial and JPMorgan are the broker for the OFS of the company.

Rupee

Last week, the Indian rupee ended marginally higher at 71.36 on February 14 against February 7 closing of 71.40.

“Ever since the budget, USD/INR spot has been consolidating in a very tight range of Rs 71.10-71.50. Next week, we can see some FII/FPI participation in Avenue Supermarts (DMart) stake sale. This OFS related dollar inflows may support rupee," Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services, said.

"However, focus will continue to be on the coronavirus and what extent it is creating any disruption to global growth, thus, 71.10 is a crucial support in spot, a break of which can take prices towards 71 and below, until then we expect the USD/INR spot to trade within 71-71.50 range," he added.

Crude

Oil prices remained under pressure however it registered their first weekly gain since early January.

Oil prices rose more than 1 percent and posted their first weekly gain since early January amid hopes demand will rebound.

The gains are backed by expectations producers will implement deeper output cuts to offset slowing demand in China caused by the coronavirus outbreak.

PSU banks merger

The Centre is likely to announce merger of 10 public sector banks to create four big banks. The merger process may be completed by April.

In August 2019, the government had announced four major public sector banks mergers, bringing down their total number from 27 to 12.

Finance Minister Nirmala Sitharaman had announced tentative amounts of capital infusion in 10 PSBs.

Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged to create the country’s second-largest lender.

Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank. Andhra Bank and Corporation Bank will be merged with Union Bank of India.

Technical outlook:

Nifty50 managed to hold 12,000 level and closed the week on flattish note as it formed a Doji candle on weekly scale and Bearish candle on daily scale on February 14.

"Markets reacted from our mentioned resistance zone of 12,250 and closed on a negative note. 12,000 is likely to act as near term support on the downside," Amit Shah, Technical Research Analyst with Indiabulls Ventures said.

He expect Nifty to remain in a near term range of 12,000-12,250 for few sessions.

The market breadth was negative for the third session in a row but nothing alarming as yet.

F&O cues:

The options data on the Nifty index indicate stiff resistance at 12,200 where aggressive call writing has been observed on the weekly and monthly expiry.

"The index will continue to witness selling pressure and can decline towards the levels of 12,000-11,900 where fresh put writing has been observed," Kunal Shah, Derivative Analyst, Indiabulls Ventures said.

Option data indicates an immediate trading range between 12,000 to 12,300 zones. On options front, maximum Put OI is at 12,000 followed by 11,800 strike while maximum Call OI is at 12,500 followed by 12,400 strike. Call writing is mainly seen at 12,200 followed by 12,300 strike while Put unwinding is seen at all the immediate strikes.

Corporate action

Here are the key corporate actions taking place in week ahead:

Global Cues

Here are the key global data points to watch out for in week ahead: