Nifty50 and Banknifty Outlook for Week - ( 13 Sep , 2021 - 17 Sep , 2021 )
The market in the truncated week ended September 9 failed to show the charm that was seen in the previous week. It was largely a week of consolidation, with the benchmark indices rising just third of a percent in the absence of any big domestic cues and weak trend in global markets. The indices had gained more than 3.5 percent each in the previous week.
The BSE Sensex climbed 175.12 points to close at 58,305.07, and the Nifty50 rose 45.65 points to 17,369.25. Meanwhile the outperformance in broader markets continued with the BSE Midcap and Smallcap indices rising more than a percent each.
FMCG, energy, power and select metal stocks aided the rally, but the selling pressure in healthcare, select banks and IT stocks limited the upside.
The market is expected to continue with its consolidation phase in the coming week in the absence of any significant domestic cues. All eyes will be on the global developments now and coronavirus updates, experts feel.
"Following a rapid rally above 17,400, markets may face small bumps on the road in the coming week. The core US inflation data may cause whipsaws in the markets in case it strikes a sensitive chord of taper talks," said Samco Securities Research.
He further said, "An overall bullish theme is expected to continue with profit-taking in overpriced stock-specific counters." As a result, investors must continue to invest in fundamentally strong stocks for the long term, he advised.
Here are Some key factors that will keep traders busy next week:
1) Coronavirus and Vaccination
The tight control over spread of Covid-19 infections with increasing pace of vaccination across the country seems to have acted as a strong support for the market, though globally infections count in some developed countries including United States and United Nations are still at elevated levels. Experts feel the market will closely watch the Covid infections data to figure out any and major signs of third Covid wave.
India in the last 24 hours ended at 8 am on Saturday reported fresh 33,376 Covid cases while more than 65.27 lakh Covid vaccine doses were administered in the same period, and with that more than 73 crore people have been vaccinated so far in the country, of which 55.65 crore people had taken their first dose and the rest have completed first as well as second dose.
2) IPO
Bengaluru-based auto-component maker Sansera Engineering will launch its Rs 1,283-crore initial public offering on September 14. The offer will close on September 16. This would be the 41th IPO to be launched this year.
It is a complete offer for sale, so the subscription figure will be closely watched. The price band for the offer has been fixed at Rs 734-744 per equity share.
3) Listing
South-India based diagnostic chain Vijaya Diagnostic Centre and specialty chemical company Ami Organics will make their debuts on the BSE as well as NSE on Tuesday. Their public issues closed for subscription on September 3. The final prices for the offers are likely to be fixed at Rs 531 per equity share and Rs 610 per share, respectively.
The public issue of Ami Organics was subscribed 64.54 times, while Vijaya Diagnostic public issue saw 4.54 times subscription.
Ami Organics continued to trade at a strong premium of Rs 150 in the grey market which resulted into a trading price of Rs 760 per share against expected final issue price of Rs 610 per share, the IPO Watch and IPO Central Data showed. But IPO Central data showed that there is no trading premium for Vijaya Diagnostic Centre in the grey market.
4) FII Flow
Foreign institutional investors seem to have preferred to book some profits in the passing week as they have net sold Rs 1,113.88 crore worth of shares against more than Rs 6,800 crore of net buying in the previous week. FII has always played either big supportive role or acted as a spoiler in the market, as in the previous week they had played a key role to drive the benchmark indices higher by over 3.5 percent and to a fresh record highs, though retail investors continued to poured in money and supported the market.
Going forward experts largely feel the FII money is here to stay as Fed tapering, if any, is expected to take place at a slower pace with analysing economic data.
On the contrary, domestic institutional investors turned net buyers during the week, to the tune of Rs 1,115.55 crore worth of shares against net selling of Rs 1,421.12 crore in previous week.
5) CPI Inflation
Consumer Price Index (CPI) inflation, one of the key points in the list of RBI before taking interest rate decision, is expected to be steady at around 5.6 percent for the month of August due to expected peak in the global commodity prices and likely decline in food prices, experts feel. The data will be released on Monday.
"We forecast CPI inflation will hold steady at 5.60 percent in August, the same as in July. Even within the drivers of the headline, there appears to be a holding pattern, with food prices experiencing a seasonal increase, and the surge in imported commodity prices starting to peak," said Rahul Bajoria, Chief India Economist at Barclays.
"Furthermore, there are signs of food prices declining across a diverse set of items, but it is still too early to call it a sustainable trend. Overall, we continue to forecast that CPI inflation will average 5.4 percent in FY2021-22, with risks biased modestly to the upside," he added.
Wholesale Price Index (WPI) inflation for August will be released on Tuesday, while the balance of trade data for August will be announced on Wednesday. Foreign exchange reserves for the week ended September 10 will be released on Friday.
6) F&O Cues
On option front, on September 9, the maximum Put open interest was seen at 17300 strike followed by 17000 & 16800 strikes while maximum Call open interest was seen at 17400 followed by 17500 & 17600 strikes.
Call writing was seen only at 17400 strike with Call unwinding at 18000 and 17500 strikes while Put writing was seen at 17300 & 17000 strikes with Put unwinding at 17200, 16500 & 17100 strikes. This option data indicated that an immediate trading range for the Nifty50 could be between 17000 to 17500 levels.
India VIX, which measures the expected volatility in the market, climbed above 15 mark during the week but finally settled down below 14 mark at 13.94, down from 14.54 levels on week-on-week basis as there was a consolidation throughout the week.
"The volatility index subsided last week as the Nifty consolidated in a narrow range and India VIX closed at its lowest levels seen in the month below 14 levels. Looking at the options base, the Nifty has the highest open interest concentration at ATM 17400 Call strike. A move above this level is crucial for a fresh uptrend," said ICICI Direct.
On downsides, the brokerage believes 17,100 is will remain as important support in the current consolidation.
7) Technical View
The Nifty50 gained 0.09 percent on Thursday and formed bullish candle on the daily charts as the closing was higher than opening levels, while the index was up third of a percent during the week and saw Spinning Top kind of candle formation on the weekly scale as the closing was near its opening levels, indicating indecisiveness among bulls and bears. Hence experts feel the rangebound trade could continue with Nifty facing resistance at 17,500 levels and 17,200 could act as a support.
"A reasonable positive candle was formed on the daily chart, which indicate a continuation of rangebound action in the market. There was no sharp weakness on the day of weekly F&O expiry of Thursday and a sustainable buying has emerged towards end. This could signal chances of an upside bounce in the coming sessions," said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
He further said Nifty on the weekly chart formed a small negative candle with minor upper and lower shadow. "Technically, this formation indicate a spinning top type candle pattern at the new highs. As happened in the past, the market could now shift into a broader high low range of around 17,600-17,200 levels by next week."
"Having recovered in the later part of Thursday, there is a possibility of an upside bounce in the next early part of next week before encountering another resistance around 17,500-17,600 levels. Immediate support is placed at 17,200," he said.
8) Bank Nifty
Bank Nifty also remained consolidative throughout the week, which was one of reasons for consolidation in the Nifty50, ending 0.21 percent lower for the week and formed bearish candle on the weekly as well as daily charts. The index was down 0.23 percent on Thursday. Experts continue to feel the momentum is expected to continue in the banking space as long as the index holds 36,000 mark.
In the passing week, it consistently held crucial 36,000 mark after volatility, with Kotak Mahindra Bank outperforming among major banks with 1.5 percent gains.
On option front, the maximum Put open interest was seen at 36000 strike followed by 36500 & 37000 strikes while maximum Call open interest was seen at 37000 followed by 37500 & 36000 strikes.
Call writing was seen only at 36800, 36700 & 36500 strikes with Call unwinding at 36000 strike while Put writing was seen at 36700, 36800 & 37000 strikes with Put unwinding at 36000 strike.
"For the coming week, trading range for the index is likely to expand as highest Put base remain intact at 36000 but the highest Call base has moved higher and is placed at the 37500 strike. We feel the bias remains positive and any dips towards its highest Put base would be an opportunity to create fresh long positions," said ICICI Direct.
Have a Great Week Ahead Everyone