Nifty ended with weekly declines of 1.5% amid a rout in banking stocks led by HDFC Bank. When markets resume trading on Tuesday, a host of important domestic and global events lined up during the holiday-truncated week are likely to impact them.
“Nifty concluded the week at 21,571.80, marking a decline of 323 points from 21,894 levels, on a weekly basis. Pharma, realty, and metal sectors faced selling pressure. Despite persistent attempts to breach crucial resistance, each of them resulted in a sell-off,” Om Mehra, Technical Analyst, at SAMCO Securities said.
The market exhibited a consolidative trend within the 21,500-21,750 range, indicative of a sideways movement going ahead, Mehra said, adding that weekly support stands firm at 21,400 levels while the upper Bollinger band poses resistance at 21,850.
Factors that are likely to impact movement when markets reopen this week:
1) US Markets
US markets ended up on Friday, though the gains were minor. While Dow 30 closed at 37,863.80, up by 395.19 points or 1.05% the S&P 500 surged by 58.87 points or 1.23% to finish at 4,839.81. Meanwhile, Nasdaq Composite settled at 15,311, higher by 255.32 points or 1.70%.
When Indian markets reopen on Tuesday, they will take cues from the Monday closing of the US markets. They will also track movement in GIFT Nifty futures on Tuesday. The latter is an early indicator of movement in the Nifty50.
2) Rupee Vs Dollar
The Indian rupee closed stronger on Friday, supported by dollar sales from foreign banks, but snapped a two-week winning streak as a moderation in US rate cut expectations and equity-related outflows weighed on the local unit earlier in the week, Reuters reported.
The rupee closed at 83.0650 against the US dollar, up 0.07% from its previous closing of 83.1225. The local currency recorded a weekly decline of 0.17%.
“The rupee is expected to trade range bound next week as inflows will get absorbed by dollar buying from RBI who cannot allow too much rupee strength at the cost of floundering exports and rising imports particularly when geopolitics problems do not subside in the Middle East. The range for rupee is expected to be 82.80 to 83.40 broadly and 82.95 to 83.25 narrowly,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
3) Q3FY24 earnings
Axis Bank, Cyient, JSW Energy, Route Mobile, Sona BLW Precisions, Bajaj Auto, Canara Bank, Ceat, CONCOR, Dalmia Bharat, DLF, Indian Overseas Bank, Indian Oil Corporation, Laurus Labs, Railtel Corporation, Tata Steel, Tech Mahindra, TVS Motor Company, Uco Bank, ACC, Adani Power, IEX, IGL, Punjab National Bank and SBI Life among others will announce their December quarter earnings.
4) Corporate Action
Angel One: January 23 will be an ex date and record date for eligibility for interim dividend; January 24 for Wipro’s interim dividend; January 25: ex date for interim dividend of Mastek, Ksolves, KDDL, IIFL Finance. The record dates also fall during the week.
January 25 will also be the ex-date and record date for the sub-division of Dolphin Offshore Enterprises’ shares.
5) Technical Factors
Nifty opened with a gap up in a special trading session on Saturday but traded sideways to down throughout the day to close lower.
Decoding the trend, Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities said that strong PUT writing (bulls’ entry) with call writers exiting (bears exit) was observed at 21,500 & 21,600 Strike in Nifty. Strong put writing at a particular strike price, is usually considered as a sign of support getting stronger and stronger possibility of price moving higher, he added.
The option activity at 21,500 strike will provide cues about Nifty’s direction in the coming days and if PUT writers exit from the 21,500 strike, the fall can extend further until 21,000 levels, Ramani warned.
As for Bank Nifty, both the CALL and PUT writers battled out at 46,000 strike in the index and the option activity at 46,000 strike will set the tone for future movement, the Samco analyst opined.
6) FII / DII Action
FIIs and DIIs will be crucial on how markets perform on Tuesday. On Saturday, foreign institutional investors were net sellers and offloaded Indian equities worth Rs 545.58 crore. Meanwhile, domestic institutional investors (DIIs) were net sellers at Rs 719.31 crore.
7) IPO Action
The primary market will not be without action with as many as six IPOs, including the mainboard Nova Agritech, ready to be launched next week. Apart from the new public offers, shares of Medi Assist Healthcare will also debut on the exchanges.
Read more: IPO calendar: Nova Agritech among 6 issues to be launched next week
8) Crude Oil
On the Comex, US WTI crude oil futures ended at $73.420 per BBL, down by $0.520 or 0.700% while Brent oil futures at $78.680, lower by $0.50 or 0.630%. As for MCX crude oil futures, the February contract ended at Rs 6,123, up by Rs 17 or 0.28%.
Oil prices are critical to Indian macros and also inflation and impact overall sentiments in the markets.
9) Bond Yields
Indian government bond yields ended little changed on Friday as stronger-than-expected demand at the weekly debt sale offset the impact of rising US yields. India’s benchmark 10-year yield ended at 7.1790%, following its previous close at 7.1774%. The yield ended flat for the week after falling five basis points last week, Reuters reported.
Going ahead, the movement in bond yields will be dictated by the Reserve Bank of India’s (RBI) tone in upcoming monetary policy reviews, according to Icra Analytics, an arm of Icra ratings agency. The RBI’s next policy meeting is on February 8.
10) Gold
Gold ended with weekly declines amid a stronger dollar and higher bond yields. The trading will resume on Monday, though the session will be truncated.
On Friday, the February contract on MCX closed with minor losses of Rs 16 or 0.03% at Rs 61,988 per 10 gram while March Silver contracts settled at Rs 71,510, up by Rs 50 or 0.07%.
On the Comex, yellow metal futures finished at $2,031.80, higher by $10.20 or 0.50% while Silver futures closed at $22.750, up by $0.057 or 0.250%.
“Gold still looks top-heavy as sharp rate-cut bets are being pared, amid strong risk sentiments. The yellow metal will need a continuous flow of disconcerting geopolitical headlines to stay afloat, otherwise a test of the $1960-$1970 support zone is on the cards in the coming weeks,” Praveen Singh, Associate Vice President, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas said. He sees immediate support at $2015/$2000 while resistance at $2040/$2050/$2065/$2075.
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