Nifty50 and Banknifty Outlook for the Week- ( 17 Jan - 21 Jan , 2022 )
The market had a good run for the fourth consecutive week ended January 14, with the benchmark indices posting 2.5 percent gains as the earnings season got underway.
In the week gone by, the market, which has gained 7.5 percent in the last four weeks, was supported by positive numbers as well as commentary from IT majors along with favourable global cues.
The BSE Sensex closed above the 61,000, rising 1,478.38 points during the week to 61,223, while the Nifty settled at 18,255.75, up 443 points.
Broader markets also joined the party. The BSE midcap and smallcap indices gained 2.4 percent and 3 percent.
On January 16, the market will react to HCL Technologies and HDFC Bank's earnings reported after the market hours.
"Markets have made remarkable progress in the last one month and now inching closer to a record high. While we have mixed indications from the global markets, we believe earnings would dictate the market trend ahead," says Ajit Mishra, VP Research at Religare Broking.
The pre-budget rally being seen in several sectors is likely to expand to other segments as the Union Budget, which is to be presented on February 1, draw close, say experts.
"Among the other events and data, expectations around the Union Budget have started triggering noticeable moves across the board. Amid all, global cues and updates on the COVID situation are also on the market's radar," Mishra said.
Here are Some key factors that will keep traders busy next week:
The earnings season will be in full swing as biggies from several sectors, including UltraTech Cement, Bajaj Finance, Bajaj Auto, Asian Paints, Bajaj Finserv, Hindustan Unilever, JSW Steel, Reliance Industries and ICICI Bank, will report their December quarter numbers.
Angel One, Tata Steel Long Products, Tatva Chintan Pharma Chem, ICICI Prudential Life Insurance Company, ICICI Securities, L&T Technology Services, Tata Elxsi, Ceat, ICICI Lombard General Insurance Company, JSW Energy, Larsen & Toubro Infotech, Sterlite Technologies, Syngene International, Tata Communications, Biocon, Cyient, Havells India, Bank of Maharashtra, Mphasis, Persistent Systems, PNB Housing Finance, Shoppers Stop, Bandhan Bank, CSB Bank, Gland Pharma, HDFC Life Insurance Company, IDBI Bank, Inox Leisure, L&T Finance Holdings, Polycab India, PVR, SBI Life Insurance Company, and Yes Bank will also release their December quarter earnings during the week.
India's coronavirus share count continues to grow but the market seems to have taken the third wave in its stride. The risk of hospitalisation and mortality rate, so far, has been low compared to the previous waves, supporting the market sentiment, experts say.
The benchmark indices have rallied 10 percent in last month as states have opted for restrictions and gone for lockdowns that are more disruptive.
India recorded 271,202 new COVID-19 cases in the last 24 hours, the health ministry said in its latest update on January 16.
As the market inched towards the previous record highs, foreign institutional investors turned net sellers in the week gone by. The mood at FII desk will be closely watched in the run-up to the budget.
They net sold more than Rs 4,000 crore worth of shares in the week ended January 14 but domestic institutional investors managed to offset most of the selling as they net bought more than Rs 3,600 crore worth of shares.
After almost a month, the primary market will be active again as AGS Transact Technologies will launch its initial public offering (IPO) on January 19. The price band for the offer, which closes January 21, has been fixed at Rs 166-175 a share.
Also read: Why AGS Transact Tech dropped 68% in unlisted market
The company aims to raise Rs 680 crore the IPO, which is entirely an offer for sale by shareholders.
So far, 40 companies have received the Securities and Exchange Board of India’s (SEBI) approval to go ahead with IPO plans.
The Nifty formed a bullish candle on the daily charts despite a negative close (down 2 points on January 14), as the closing was higher than opening levels. For the week, there was strong bullish candle formation on the weekly scale as the index gained 2.5 percent, indicating positive momentum.
After decisively crossing the 17,900-17,950 hurdle, the market seems to be in a strong position and could surpass its previous closing high of 18,604 levels soon, though there could be small intermittent corrections, experts said.
"While the resistance of 17,950 has been decisively broken, the benchmark index now seems to be targeting its previous all-time high. We suggest traders maintain a bullish bias on the market," says Yesha Shah, Head of Equity Research at Samco Securities.
Minor dips cannot be ruled out and those around immediate support levels can be used as buying opportunities. Immediate support for the Nifty is at around 17,700, she said.
On the weekly options data, maximum Call open interest was seen at 19,000 strike, followed by 18,200 and 18,800 strikes. Call writing was seen at 19,000 strike, then at 18,200 and 18,800 strikes with unwinding at 17,900 and 17,600 strikes.
Maximum Put open interest was seen at 18,200 strike, followed by 18,000 and 17,900 strikes. The highest Put writing was seen at 18,200 strike then 18,000 and 17,900 strikes. The highest Call as well as Put base was seen at 18,200 strike, which possibly indicates consolidation before further direction, especially as we approach the Budget. The level of 18,000 is expected to act as crucial support, experts said.
"While the Nifty remained above 18,200, both Call and Put base remain highest at this strike, suggesting some consolidation in the index. Moreover, after a sharp up move of almost 1,700 points in less than a month, consolidation cannot be ruled out," ICICI Direct said.
Considering the momentum in mid and small caps, the focus will likely be stock-specific ahead of the budget, the brokerage said.
In the last month's rally, banking has been one of the biggest contributors. The Nifty Bank index has gained 11.4 percent since December 20. Last week, it was up 1.67 percent to close at 38,370.40, especially after positive signals from initial numbers released by several banks. If the momentum sustains and earnings meet expectations, then 40,000 can't be ruled out in the coming weeks, experts said.
"Nifty Bank is facing some resistance at 61.8 percent retracement of the previous fall from the high of 41,829 to the low of 34,018, however, the overall structure is bullish and if it manages to take out 38,900-39,100 resistance zone, then we can expect a rally towards 40,000-40,500 levels," said Santosh Meena, Head of Research at Swastika Investmart.
On the downside, 38,000 is an immediate support level and 37,500-37,000 the next support levels, he said.
The maximum Call open interest was seen at 38,500 strike followed by 39,500, 39,000 & 40,000 strikes. Call writing was seen at 38,000 strike then at 38,400 and 39,500 strikes. Maximum Put open interest was seen at 38,000 strike, followed by 37,500 & 37,000 strikes. The highest Put writing was seen at 38,000 strike then 37,000 and 38,100 strikes.
"Support for the index remains at 38,000, which is the highest Put base. With this support, we feel the index should head towards 40,000 levels on upsides," said ICICI Direct.
"Banking heavyweights results are lined up in coming days, which should trigger stock-specific actions but looking at the overall closures in Call writing positions, we feel the Bank Nifty should test 40,000 on upsides."
The volatility cooled down to around 16.5 levels, with India VIX, which measures expected volatility in the market, settling at 16.56 against 17.60 on week-on-week basis. Experts, however, expect volatility to continue, especially ahead of the budget.
"India VIX has not subsided below 16 levels despite the up move and closed the week near 16.5. Ahead of the Union Budget, volatility would continue to remain higher but positive bias would prevail until the volatility remains below 18 percent levels," ICICI Direct said.
Have a Great Week Ahead Everyone
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