Dalal Street Week Ahead: Here are 10 key factors that will keep the traders busy

The market witnessed consolidation throughout the week ended September 18 and closed on a flat note amid mixed global cues and lingering India-China border issue.

IT and pharma stocks hogged the limelight by gaining 6-9 percent during the week, but selling in banking & financials and FMCG shares weighed on the sentiment.

The BSE Sensex closed 8.73 points lower at 38,845.82, while the Nifty50 gained 40.50 points at 11,504.95, whereas the broader markets regained ground by outperforming frontline indices. The Nifty Midcap index climbed 3.8 percent and Smallcap rose 6 percent.

Given the lack of major domestic and global cues, the market is expected to remain in a consolidation mode, experts feel. They advised maintaining caution and feel the stock specific action may continue.

"Markets have been trading with uncertainty and the clear lack of direction to either side was visible in this week's trades. The worry was visible as investors would have cleared their positions heading into the weekend. Due to lack of any fresh triggers for the market, the current uncertainty is expected to continue," Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

"But any news with regards to the border tensions with China, or global events can impact the markets on the downside. As such, investors need to be cautious and watch for news-specific movements," he said.

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

CAMS & Chemcon Speciality Chemicals

The major activity is expected to be in primary market than secondary market, in the coming week, as on the first day of week itself, two companies namely - Computer Age Management Services (CAMS) and Chemcon Speciality Chemicals will open their public issues for subscription, with a price band of Rs 1,229-1,230 per share and Rs 305-306 per share respectively.

Both will close on Wednesday and are expected to see strong demand from investors given the business potential going ahead. CAMS aims to raise Rs 2,244 crore and Chemcon Rs 318 crore via public issues.

Route Mobile

On Monday, Route Mobile, the cloud communication platform as a service (CPaaS) provider to enterprises, over-the-top (OTT) players and mobile network operators (MNOs), is also set to debut on bourses after the finalisation of issue price at Rs 350 per share and seeing hefty subscription of 73.3 times by its Rs 600-crore IPO.

Given the strong financials, growth opportunity in cloud communication segment amid expected increase in digitalisation, experience management team etc, analysts expect Route Mobile to start the day with around 60 percent premium over IPO price.

Angel Broking

The activity seems to be endless in the primary market as Angel Broking, the third IPO during the coming week, will also hit Dalal Street on Tuesday (September 22) and close on September 24. Its anchor book will open for a day on September 21.

The retail broking house aims to raise Rs 600 crore via IPO which consists a fresh issue and offer for sale of Rs 300 crore each. The price band has been fixed at Rs 305-306 per share.

Coronavirus

COVID-19 remains a talking point given the rising infections in also some of unaffected areas of the country, though there has been consistent improvement in recovery and fatality rates.

On an average, India has reported more than 90,000 confirmed COVID-19 infections daily in the passing week, taking the total infected cases count to around 54 lakh with over 86,000 deaths as per Johns Hopkins University, which experts feel largely due to sharp increase in testing count and partly due to unlock, but doctors consistently advise to follow instructions like wearing of mask, social distancing and washing of hands regularly which can definitely lower not only infections but also deaths.

The good part to note here is the consistent improvement in recovery rate, which was 79.4 till Saturday this week against 77.68 in previous week, and fatality rate, which fell to 1.60-1.61 from 1.66 last week.

On the global front, too, it has been turning more serious as so far more than 3 crore people are infected with over 9.5 lakh deaths. Latest cause of concern is the sudden spike in infections in European countries like France and Spain, which the World Health Organisation says is a serious situation.

Union Health Minister, Harsh Vardhan on September 18 said nearly 30 coronavirus vaccine candidates in the country are in different stages of pre-clinical and clinical development, of which three candidates are in the advanced stage of Phase I/II/III trials and four are in the advanced pre-clinical development stage.

India-China Border

The market will continue to keep close watch on the India-China border issue, though both countries agreed in Moscow on a five-point plan to de-escalate tensions along the Line of Actual Control (LAC) in Ladakh.

Withdrawal of troops by China at key friction points and maintaining a peace along LACs are key important issues to be resolved. PTI sources said the situation remained tense at both the north and south bank of the Pangong lake area as well as at other friction points in eastern Ladakh.

On September 18, the government carried out a comprehensive review of the overall situation in eastern Ladakh including India's operational preparedness in view of the continued belligerence by the Chinese army and its fresh attempts to "intimidate" Indian troops in the region, PTI said quoting government sources.

FII and DII Flow

The inflow from foreign institutional investors into Indian equities remained positive for the week (Rs 1,689.1 crore net buying) as well as September month so far (Rs 1,276.34 crore of buying), but DIIs remained net sellers to the tune of Rs 2,396.85 crore for the week and Rs 5,667.47 crore, so far, in September.

FIIs had inflows in previous four consecutive months, but DIIs were net sellers in previous two straight months amid redemption pressure.

Experts feel the FII flow to continue into equity, but the flow could shift from secondary market to primary market given the number of IPOs coming going ahead.

Technical View

The Nifty50 fell 11.10 points to close at 11,505 on Friday and formed Bearish Belt Hold kind of pattern on the daily charts, while during the week, the index gained 0.35 percent and witnessed Doji kind of formation on the weekly scale, which overall indicated lacklustre week going ahead.

Experts also feel the sideways move may continue with a negative bias in the coming week and also as RSI has shifted to the sideways zone from the bullish zone, the bullish momentum is losing steam.

"Nifty is currently trading in an overbought zone which is in sync with the global indices and minor fractures in the form of corrections may continue. We therefore maintain a cautious stance on the market and suggest traders remain watchful of key levels. The immediate support and resistances are now placed at 11,200 and 11,630 respectively," Nirali Shah, Senior Research Analyst at Samco Securities told Moneycontrol.

F&O Expiry

The market may witness some volatility also due to the expiry of September futures & options contracts on coming Thursday and roll over of positions to next month.

Maximum Call open interest after 12,000 strike was seen in 11,600 strike, which can be seen as an immediate resistance point, while maximum Put open interest was seen at 11,500 strike, which can act as crucial support in the coming week, followed by 11,000 and 11,400 strikes.

Call writing was seen at 12,000 strike, followed by 11,800 and 11,600 strikes, while Put writing was seen at 11,200 strike, followed by 10,900-11,500 strikes. Overall all these data points indicate 11,500 could be a crucial level to watch out for in coming week.

premium for this straddle is near 200 whereas implied volatility continued to decline and slipped below 20 levels last week. We feel the index would consolidate for a few sessions with strong support for the week pegged at 11,300," ICICI Direct said.

"Volatility is expected to be high this week due to rollovers while major trigger in stocks would be based on the quantum of rollover," the brokerage added. India VIX fell by 3.22 percent from 20.71 to 20.04 levels during the week.

Global Cues

Corporate Action

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