Nifty50 and Banknifty Outlook for the Week - ( 13 Dec - 17 Dec , 2021 )
Bulls retained their control over Dalal Street for the second consecutive week. The easing of new Covid variant concerns and more dovish than expected RBI monetary policy boosted market sentiment, pushing the BSE Sensex higher by more than 1,000 points during the week despite persistent FII selling.
The BSE Sensex rallied 1,090.21 points or 1.89 percent to 58,786.67, and the Nifty50 jumped 314.60 points or 1.83 percent to 17,511.30, backed by rate sensitive, infra, FMCG and metals stocks.
The broader markets also joined the bulls' party with the BSE Midcap and Smallcap indices rising 2 percent and 3 percent respectively.
In the coming week, the market will first react to October industrial output data that grew further to 3.2 percent against 3.1 percent in September. The positive momentum amid volatility is likely to continue, but still Federal Reserve commentary, November inflation and the data on Omicron are going to be critical factors for the market direction next week, experts feel.
"The coming week is going to be critical for the markets as we have some important data and events are lined up. Importantly, we have the US Fed meet scheduled and they will announce the outcome on December 15. Apart from these data, the updates on the global COVID situation will remain on participants' radar," says Ajit Mishra, VP Research at Religare Broking.
He further says though the fear about the new COVID variant has subsided, they are still seeing volatility across the globe and expect the trend to continue next week as well. "Going ahead, we feel the recovery would remain uneven, thus recommending continuing with a positive yet cautious approach."
Here are Some key factors that will keep traders busy next week:
IPOs
The primary market will continue to be busy as four IPOs - Medplus Health Services, Data Patterns, HP Adhesives and Supriya Lifescience - will hit Dalal Street next week, while two IPOs - CE Info Systems (MapmyIndia) and Metro Brands that already opened for subscription will close on December 13 and December 14 respectively.
India's second-largest pharmacy retailer Medplus Health Services will open its IPO for subscription during December 13-15 to raise Rs 1,398 crore and its price band is Rs 780-796 per share.
The Rs 588-crore maiden public offer of Data Patterns India, a defense and aerospace electronics solutions provider, will get launched during December 14-16, and its price band has been fixed at Rs 555-585 per share.
HP Adhesives will be the third public issue, getting opened during December 15-17, with a price band of Rs 262-274 per equity share, and this is having the smallest issue size amongst these four. Pharma firm Supriya Lifescience will be the fourth IPO that will open during December 16-20, to raise Rs 700 crore.
Listings
There will be three listings in the coming week. Tega Industries, the second largest producer of polymer-based mill liners, will make its debut on the bourses on December 13 and experts feel the listing premium could be around 30-40 percent over issue price of Rs 453 per share.
Anand Rathi Wealth and Rategain Travel Technologies will list their equity shares on the BSE and NSE on December 14 and December 17 respectively. According to experts, both could see flat to 10 percent gains on debut.
Economic Data
CPI inflation for the month of November will be released on Monday and WPI inflation on Tuesday. Experts largely feel the CPI inflation could be around 5 percent against 4.48 percent in October.
"We are not expecting any negative surprises. In fact, with the cooling off of crude and food prices, we expect the CPI inflation to be largely in line with expectations or slightly below," said Abhay Agarwal, Founder at Piper Serica.
Balance of trade data for November will be announced on Wednesday, while deposit & bank loan growth, and foreign exchange reserves for the week ended December 10 will be released on Friday.
FOMC Meet
Globally the focus will be on the outcome of meetings of central banks and amongst them the meeting of the Federal Open Market Committee will be key to watch out for. Experts largely feel the ending of the bond buying program sooner than later and rate hike trajectory could be on the agenda of the Fed's meeting, but hope there could be no negative surprises.
"All eyes will be on the stand FOMC adopts on tapering and interest rate hike trajectory. While it is widely expected that the FED will consider the intensity of the Omicron variant before aggressively preponing tapering plans, any surprises in the announcements can cause choppy movements," said Yesha Shah, Head of Equity Research at Samco Securities.
The interest rate decisions and commentaries of the European Central Bank, Bank of England, and Swiss National Bank on Thursday, and Bank of Japan on Friday will also be keenly watched globally.
FII Selling
The market will closely watch the mood of FIIs who are consistent sellers since November 16, though DIIs have been trying to support the market with their inflow.
In the week gone by, foreign institutional investors have net sold more than Rs 9,200 crore worth of shares when Domestic institutional investors net bought over Rs 7,200 crore worth of shares, as per the Moneycontrol data. FIIs were net sellers to the tune of Rs 16,235 crore in the current month, continuing selling for the third straight month, however, DIIs made Rs 13,700 crore of net buying in December, continuing purchases for the 10th consecutive month.
The 10-year US bond yields fell from 1.68 percent on November 24 to 1.35 percent on December 3, then during the week it rose up to 1.48 percent, while US dollar index, which measures the value of US dollar against the world's leading six currencies, fell to 96.05, from 96.11 on week-on-week basis.
Omicron
The concerns with respect to the new Covid-19 variant Omicron has been eased last week, but the market will continue reading the global newsflow with respect to the new variant. India, so far, reported 33 cases of the new variant, but on the other side the daily addition of Covid cases has gradually been under control, falling below the 10,000 mark with increasing vaccination and testing across the country.
Nearly 132 crore Covid doses, so far, have been administered in the country as of Friday, and of which more than 38 percent people completed their second Covid vaccine dose. Several nations including the United Kingdom, United States, Argentina, Spain, and South Africa still have their Covid cases graph in the upward direction.
Technical View
The Nifty50 saw bullish candle formation on the daily as well as weekly charts. The index twice managed to hold 16,900 mark in recent correction, and also get back above 17,000 mark in the following session. In the last two straight sessions, it firmly held above 17,500 mark. All this indicates positive market sentiment and if the index manages to hold the same levels then there could be further rally towards 17,900 in coming sessions, experts feel.
"Nifty slipped below the 16,900 level two times but managed to close above this level, and it created a kind of double bottom formation around that level, however, 17,500-17,615 is a critical resistance zone. Above this, we can expect a move towards the next important resistance zone of 17,750-17,950; above this zone, bulls will be in full confidence while bears will be on backfoot," said Santosh Meena, Head of Research at Swastika Investmart.
On the downside, "17,300-17,250 will act as an immediate and strong support zone at any pullback while a move below this, may lead to selling pressure towards the 17,000-16,900 zone," said Santosh.
F&O Cues
Option data largely indicated that the Nifty could see a trading range of 17200 to 17800 levels in coming sessions, while the falling volatility could support the market, experts feel.
On option front, maximum Call open interest was seen at 18000 strike followed by 17500 & 17600 strikes, and Call writing was seen at 18000 then 18300 & 18100 strikes. Maximum Put open interest was seen at 17400 followed by 17200 & 17500 strikes, and Put writing was seen at 17400 then 17200 & 17000 strikes.
"From the options perspective, Put option concentration is strengthening at 17200 strike while the highest Call base remains at 17500 strike for the coming week as well," said ICIC Direct which believes that after recent volatility, Nifty may consolidate with immediate support near 17,200 and only a move below 17,200 may attract fresh weakness in the indices. "Sustainability above 17,500 levels should open gates for 17,800 on upside."
India VIX was down by 13 percent from 18.46 to 16.06 levels. "Volatility index has declined sharply below 17 levels along with market recovery. We believe it may remain sideways and cool-off further in coming sessions," said ICICI Direct.
Have a Great Week Ahead Everyone