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Dalal Street Week Ahead: 10 key factors that will keep traders busy next week

Despite the rising number of COVID-19 cases in the country, bulls are under Dals Street control for the sixth week in a row. The BSE Sensex and Nifty 50 gained 3% and 2.7%, respectively, in the week ended July 24, driven by Banking & Financials, IT, Infra, and Auto stocks.

A better-than-expected June scorecard for India Inc. (so far), positive FII flows, and progress in vaccine development have kept the party on the D-Street. Positive global indications were also added to the rally following the $ 858 billion large spending package announced by the European Union. However, the latest US-China tensions and US unemployment claims have risen.

The BSE midcap and smallcap indices gained more than one percent during the week, weakening broader market benchmarks.

Due to the liquidity boost, the momentum may move forward, experts expect, but benchmark indicators have rallied over 12 percent in six consecutive weeks, advising them to be cautious and expect some volatility in the coming week due to the expiration of July futures & options contracts. Next Monday, the market will first respond to ICICI Bank and ITC earnings.

“Currently, the market is trading ahead of fundamentals. Based on valuation terms, the market is currently above the pre-COVID level. It may be high due to the low actual earning of FY20 and a lack of growth in FY21. This may be also high due to the performance of a few sets of stocks with high weightage. Still, on a historical basis, we are in the bubble region in terms of valuation and it is advisable to be cautious and place assets in safe categories and sectors,” Vinod Nair, Head of Research at Geojit Financial Services said.

Ajit Mishra, VP Research at Religare Broking said in the coming week, schedule derivatives expiry of July month contracts combined with the on-going earnings season would keep the volatility high. Apart from that, global cues and updates related to the COVID-19 will also be on the participants’ radar, he added.

During the week, FIIs were net buyers of Rs 7,792 crore, while DIIs were net sellers of Rs 5,323 crore during the week.

Here are 10 key factors that will keep traders busy next week:

Earnings:

More than 560 companies are releasing their quarterly earnings scorecard, which includes some March quarter earnings, but the extended deadline for declaring March quarter earnings is July 31, with the June quarter earnings season continuing.

Key earnings for Reliance Industries, State Bank of India, Bharti Airtel, Kotak Mahindra Bank, HDFC, Maruti Suzuki India, Tech Mahindra, Dr. Reddy Laboratories, Nestle India, IOC.

Aptech, Bharat Electronics, Escorts, Havells India, India Cements, Bharti Infratel, Marico, Pfizer, United Spirits, Hexaware Technologies, IDBI Bank, IDFC First Bank, NIIT Technologies, RBL Bank, UltraTech Cement, Ceat, Colgate-Palmolive, GSK Pharmaceuticals, InterGlobe Aviation, Manappuram Finance, TVS Motor Company, Dabur India, Laurus Labs, Max Financial Services, Torrent Pharmaceuticals, JSW Energy, Tata Chemicals, TeamLease Services among others will also release quarterly earnings.

Mindspace REIT IPO:

Mind‌space Business Parks REIT launches an initial public offering of Rs 4,500 crore for subscription on July 27.

The price band for the public issue has been fixed at Rs 274-275, which includes a fresh issue of Rs 1,000 crore and a sale offer of up to Rs 3,500 crore by selling unitholders.

Mind‌space has already raised Rs 2,643.74 crore from strategic and anchor investors, which is 58.74 percent of the total issue size of Rs 4,500 crore, before the issue opening. The last day for membership will be July 29th.

Yes Bank FPO Shares Listing:

The shares issued in the Yes Bank follow-on public offer will be listed on July 27. The share price has corrected by almost 49 percent in the last two weeks, which experts believe is necessary as the issue price has given a discount to the market price.

The stock price closed at Rs.13.65 on July 24 and fell steadily from July 10 (closing price of Rs.26.65 on July 9), with the final issue price set at Rs.12 per share, during which the bank received the maximum bid for its public on July 15-17. Middle issue.

Yes, Bank raised around Rs 14,270 crore through its FPO, which was lower than the actual issue size of Rs 15,000 crore.

Reliance Industries:

Reliance Industries is the main focus for the coming week as it announced its June quarter earnings on July 30. The stock has rallied 50 percent in the last two months as Reliance has become net debt-free. March 2021, and has gained over 16 percent in the past week.

With strong EBITDA expects brokerages to average Rs 135-137 per month on a regular and annual basis, the telecom sector is important to note that on the refining front, Motilal Oswal expects GRM to trade at $ 9.0Y20 per barrel against Q9 (Q4 against $ 9.0 per barrel) and Rs. Helped by giving discounts.

Coronavirus Risk Rising:

The country has seen a steady increase in COVID-19 cases, with 40,000 cases being reported every day over the past 4 days.

There have been 13,36,861 cases reported in India so far, including 31,358 deaths. The highest number of cases were reported in Maharashtra, Tamil Nadu, Delhi, Delhi, and Karnataka. India’s recovery rate is 63.5 percent.

Worldwide, more than 1.59 million cases of COVID-19 have been diagnosed. More than 6.43 lakh people have died so far.

Prior to the vaccine, progress was rapid with three global organizations — Oxford University — AstraZeneca, Synovac, and Modernna Inc. Meanwhile, in India, Kovacin in collaboration with the National Institute of Biotech National Institute of virology and the Indian Council of Medical Research has started human testing of drugs.

Auto Sales:

Auto stocks – Escorts, Bajaj Auto, Hero MotoCorp, TVS Motor, M&M, Tata Motors, Eicher Motors, Ashok Leyland, etc – are expected to be in focus will be on the arrival of Friday as companies will release July sales data on Saturday.

So far, especially after reopening the economy in all non-container zones, there has been an improvement in the tractor and two-wheeler segment and there has been some increase in passenger vehicles, but the space for commercial vehicles has been weak.

Technical View:

The Nifty with a gain of 2.7 percent for the week saw the formation of a bullish candle on the 50-week charts, rejecting uncertain pattern formations in the previous two weeks, all indicating that bulls are still upside on Dalal Street; The index was moving in the trading range on Wednesday when the Hanging Man pattern was formed.

Experts believe that the short- to the medium-term trend is positive, but in the near term, there may be some consolidation given the steady run-up in-equities.

“Long bull candle was formed this week, as per the weekly timeframe chart, after the formation of hanging man type candle pattern of last week. Most importantly Nifty formed an unfilled opening weekly gap with this candle. This is the rare formation and previously in the last two occasions, such weekly opening upside gaps have been filled subsequently in the next week, by intra-week decline. Hence, there is a possibility of profit booking in the next week,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities, said.

“The short term trend of Nifty is rangebound with positive bias. Having placed at the hurdle of 11,250, there is a possibility of minor downward correction by early next week. A sustainable move above 11,250-11,300 levels could pull Nifty towards 11,550-11,600 in the next 1-2 weeks. Important lower support is placed at 11,100-11,050,” he said.

F&O Expiry:

July futures & options contracts expire next Thursday and traders can change their positions next month. Therefore, there may be some volatility, but the options data index is expected to move in the range of 11,000-11,350 in the coming days, experts believe.

Before the monthly selection, the maximum put open interest is at 11,000, 10,000 strikes, the maximum call open interest is at 11,500, then 11,200 strikes. Call writing appeared at 11,300 after 11,300 strikes, while put writing appeared at 11,100, at 11,000 strikes.

“The coming week has monthly expiry. Thus, the trend will be decided by the closure of Call writing positions, which are placed at the 11,200 strikes. Some positions have already shifted to 11,500 strikes, which will remain a target for the coming weeks,” said Amit Gupta of ICICI Direct.

Chandan Taparia of Motilal Oswal indicates open interest at a maximum of 11,000 marks while medium-term position support at 11,000 marks, while the latest put writing 11,100 and 11,000 strikes indicate immediate key support in 11,000 zones.

Corporate Action:

Here are key corporate actions taking place in the coming week:

Infrastructure production and fiscal deficit data for June will be released on Friday, while deposit and bank loan growth for the fortnight ending July 17 and foreign exchange reserves for the week ending July 24 will also be announced on the same day.

Global Cues:

The two-day meeting of the Federal Open Market Committee (FOMC) ends Wednesday night. Markets around the world are closely watching the comment as the June meeting suggested that the interest rate is expected to remain stable at 0-0.25 percent, but that the federal funds rate is likely to remain at these levels until the economy returns to normal.

Here are other key global data points to watch out for in the coming week:

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