NEW DELHI: Corporate earnings of nearly 300 companies coupled with expiry of futures and options contracts (F&O) for October series will be keenly watched by investors this week. Overall, the market may turn volatile towards the end of the week as traders will roll over their positions in November series on Thursday.

Quarterly earnings released so far indicate economic recovery, with cement players surprising Dalal Street by posting robust volume and margin growth. Demand revival was also visible from pharmaceuticals and FMCG numbers. IT companies have also managed to perform in line with market expectations.

Overseas portfolio investors also look gung-ho on Indian equities this month. Last week, the BSE Sensex and NSE Nifty ended in the green amid hopes a US stimulus package before the presidential election and expectations of a Covid-19 vaccine by year-end.

The 30-share BSE Sensex gained nearly 703 points, or 1.76 per cent, to 40,685 for the week ended October 23. The 50-share Nifty index gained nearly 167 points, or 1.43 per cent, to 11,930.

That said, the week ahead is going to be a busy one with earnings from major largecaps and midcap firms, some of which may have a bearing on market behaviour. Going by the buzz on Dalal Street, here are the top factors that are likely to guide the market going forward.

Q2 earnings
Market participants will be eyeing financial results starting from Kotak Mahindra Bank, Mahindra & Mahindra Financial Services, SBI Life Insurance, Bharti Airtel, Castrol India, CEAT, ICICI Prudential Life Insurance, Suven Life Sciences, Tata Motors, Axis Bank, Dr Reddy’s Labs, Hero Motocorp, Larsen & Toubro, Marico, Multi Commodity Exchange, Moil, PNB Housing Finance, RBL Bank, Schaeffler India, Tata Coffee, Titan Company, UTI Asset Management Company, Bank Of Baroda, Blue Dart Express, Canara Bank, Cholamandalam Investment, Havells India, Maruti Suzuki India, TVS Motor Company, IFB Industries and UPL, among others.

F&O expiry
The domestic equity market is likely to be volatile on account of derivatives expiry for the month of October, which is scheduled to take place on October 29.

Overseas portfolio flows
Foreign portfolio investors (FII) have bought shares worth over Rs 15,000 crore in October so far. Any further buying by overseas investors will keep the sentiment buoyed. Earlier, they had sold equities worth Rs 7,783 crore in September, as per data available with NSDL. Their net investment in equities stands at Rs 92,019 crore on a year-to-date basis.

Macroeconomic data
On the economic front, traders will also be eyeing infrastructure output data which is scheduled to release on October 30. The figure in August fell 8.5 per cent year-on-year (YoY), following a downwardly revised 8 per cent drop in July. It was the 6th straight plunge in infrastructure output as the country battles coronavirus-led economic contraction. Infrastructure output, which comprises eight sectors including coal, crude oil and electricity and accounts for nearly 40 per cent of industrial output, contracted 17.8 per cent in the five months through August from a year earlier, the data showed.

Technical outlook
While remaining within a narrow range last week, Nifty50 faced stiff resistance at around 12,000-mark. Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said, “Nifty on the weekly chart formed a small positive candle with upper and lower shadow, which is similar to a high wave type pattern. This candle pattern was formed beside the negative candle of previous week. The upper area of 12,025 has been acting as a key overhead resistance in the last couple of weeks and this hurdle could be tested again in the coming week. A sustainable upside breakout of this hurdle could have a sharp positive impact on the market ahead.

Nirali Shah, Senior Research Analyst, Samco Securities, said, “The short term immediate support and resistances for Nifty50 are now placed at 11,600 and 12,050. Going ahead, markets are likely to take cues from the consensus of the US election results which may have a significant impact in the short term. Till then avoid short term swings and stay on the sidelines.”

Global cues
On the global front, investors will also focus on macroeconomic reports from the world’s largest economy, United States, starting with Chicago Fed National Activity Index, Dallas Fed Manufacturing Index on October 26, followed by Redbook, Richmond Fed Manufacturing Index on October 27, Goods Trade Balance, Wholesale Inventories on October 28, GDP Growth Rate, Jobless Claims on October 29 and finally PCE Price Index, Chicago PMI, Michigan Consumer Expectations, Baker Hughes Oil Rig Count on October 30.

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