Dalal Street Week Ahead: Here are 10 key things that will keep traders busy next week

The market staged stellar performance with the benchmark indices ending the long week at record closing high on muhurat trading day on November 14, gaining 4.2 percent. The gains were largely led by consistent FII inflow, positive global sentiment, further progress on the vaccine front and government efforts through measures to revive the economy.

The rally was seen across sectors barring IT which ended third of a percent higher, while other sectors gained 1-8 percent during the week.

The BSE Sensex surged 1,745 points to close at 43,637.98 and the Nifty50 climbed 516.70 points to 12,780.30, extending gains for second consecutive week, while the broader markets almost witnessed similar gains with the Nifty Midcap and Smallcap indices rising 3.6 percent and 3.93 percent.

The momentum is expected to continue but with a consolidation in the coming holiday-shortened week as the market already looked overbought with consistent rally, while the market may largely focus on global cues due to absence of major domestic trigger, experts feel.

"Markets are likely to remain strong as flows into emerging markets has improved in November and government, too, has been taking steps to revive the economy through production linked incentive (PLI) schemes," Hemang Jani, Head- Equity Strategy, Broking & Distribution at Motilal Oswal Financial Services told Moneycontrol.

Meanwhile, Ajit Mishra, VP-Research at Religare Broking suggests focusing on the broader markets as he is seeing fresh traction but stick to the quality midcap and smallcap names.

The equity market will remain shut on Monday for Diwali Balipratipada.

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

Coronavirus

The risk of coronavirus in India seems to be declining week-after-week as the active infections count stood at 4.8 lakh against more than 10 lakh in couple of months back. And hence this could be one of factors supporting the market as it gives indication that the economy moved almost near to normalcy in activities, experts feel.

The recovery rate was at around 93 percent this week against 92.3 percent last week, while the fatality rate was 1.48 percent against 1.49 percent in same periods.

However, the globally there were more than 5.35 crore confirmed cases with 13 lakh deaths as per Johns Hopkins University. The United States hurt the most with the highest daily infections count at 1,81,194 on November 13, taking total cases to over 1 crore with 2.44 lakh deaths, while the European countries also felt the same problem of rising cases again, which forced lockdown in some countries as hospitals were operating at full capacity due to COVID patients.

Vaccine Developments

The further progress on the vaccine front by Pfizer Inc saying earlier in the week that its COVID-19 vaccine, developing with Germany-based BioNTech, was more than 90 percent effective in a trial, buoyed sentiment globally and raised hopes for a possible vaccine by early next year.

Moderna Inc is also expected to release its crucial data in coming days from a phase-III trial. Reuters quoting company said Moderna had enough data for a first interim analysis of the late-stage trial of its experimental COVID-19 vaccine.

Germany's CureVac said its vaccine has been shown to remain stable at 5 degrees Celsius (41 F) for at least three months, making it potentially easier to distribute than some rivals' compounds, reports Reuters.

If the trial results consistently show improvement and if the vaccine gets launched earlier than later then it could be a sentiment booster, experts feel.

"If there is no recurrence of any second wave of COVID-19 infections in India and the vaccine becomes available early next year we can see continued rise in the market levels in the next FY21-22 from the present levels," Ajit Banerjee, CIO at Shriram Life Insurance said.

Economic Data Points

WPI inflation data for October will be released on Monday, while foreign exchange reserves for the week ended November 13, and bank loan and deposit growth for fortnight ended November 6 will be announced on Friday.

India's foreign exchange reserves remained strong week-after-week, rising by $7.78 billion to all-time high of $568.49 billion in the week ended November 6.

FII Flow

After the end of US elections, foreign institutional investors seem to be bullish on emerging markets including India as their support was the major reason for indices to trade at record high levels.

They have net bought Rs 19,754.4 crore worth of shares during the week, taking total inflow in November month to over Rs 33,100 crore, though domestic institutional investors have taken the advantage to book profits as they net sold Rs 20,301 crore of shares in November itself.

"The FII trend is expected to continue as Indian equity market has recovered as one of the fastest compared to other global markets and with interest rate remaining low in future investment in fixed income security doesn't continue to attract the funds," Ajit Banerjee, Chief Investment Officer at Shriram Life Insurance told Moneycontrol.

Rupee Outlook

The Indian rupee weakened by 40 paise to close at 74.60 against the US dollar in the week ended November 13 despite consistent FII inflow, impacted by rebound in the dollar index, but overall the rupee is expected to remain rangebound.

The dollar index held steady as investors were cautious over expectations about a COVID-19 vaccine that is unlikely to avert a grim winter in the US and Europe as the pandemic's latest wave intensifies, while global markets surged after Pfizer's positive news on the vaccine front which saw the dollar rise as traders quit their long-yen positions, said ICICI Direct.

Traders became more risk-averse on Thursday and Friday, after the heads of the Federal Reserve and the European Central Bank stressed that the economic outlook remains uncertain, the brokerage added.

Overall, according to the brokerage, the rupee is expected to remain in a range of 74-75 against US dollar for the coming week as a rebound in crude prices is expected support the pair. However, a rally in domestic equities may cap further gains, it feels.

Listing

Gland Pharma is expected to list its equity shares on Friday after its IPO was subscribed just 2.06 times with the large support from qualified institutional buyers (whose portion was subscribed 6.4 times) while the response from other investors was muted.

The company raised Rs 6,480 crore from its IPO which was opened for subscription during November 9-11, 2020.

Technical View

The Nifty50 ended the week at record closing high in the one hour muhurat trading on Saturday and formed small bodied bearish candle as closing was lower than opening levels, but it gained 4.2 percent for the week and formed bullish candle on the weekly scale.

Technical experts remain largely bullish on the market given the consistent higher top and higher bottom formation, saying 12,500 is expected to act as a strong support.

"The Nifty index has hit fresh all-time highs and formed a big bullish candle on the weekly scale. It is also making a higher top and higher bottom formation on the daily chart which means that the immediate support is now placed at 12,500 levels," said Nilesh Jain of Anand Rathi.

As long as Nifty trades above 12,500, one should utilise every dip as a buying opportunity and one can expect further positive momentum to continue towards 12,900-13000 levels, he added.

F&O Cues

On the derivative front, a huge amount of Put writing was seen at 12,600 strike which holds the highest open interest contracts, which is also likely to act as a major support in the coming week. The second highest open interest is placed at 12,700 which shows that the Put writers have shifted their positions higher and the downside is capped.

A fresh addition was seen in 13,000 strike which also holds the maximum open interest and also likely to act as an immediate hurdle. So the overall option data indicates that in the coming truncated week the Nifty index is likely to oscillate in the range of 12,500 13,000 in the coming week, experts feel.

"Noteworthy the Call base is visible at ATM 12,700 Call strike. Hence, consolidation with a positive bias seems more likely for the index in the coming week. Only a move below 12,500 may change the immediate bias for the index," ICICI Direct said.

The volatility index, IndiaVIX, fell by 4 percent this week to end below 20 levels. "The overall fall in the volatility is continuously giving comforts to the bulls and now since we don't have any major events, it is likely to remain in the range of 16-26 levels," Nilesh Jain of Anand Rathi said.

Corporate Action

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

Global Cues

Here are key global data points to watch out for next week: