Domestic markets extended their bullish tone for the third consecutive week and gained more than a percent. The beginning was unfavorable but the bias changed in the following sessions with an increase in the American markets.
The NSE Nifty 50 index gained 1.58 percent this week, its best in two months, while the Sensex rose 1.37 percent. Shares of IT companies that earn a significant portion of their revenue from the United States climbed 5.07 percent, their best week in 16 months. The more domestically focused small- and mid-caps hit fresh record highs, and outperformed the benchmarks for the week, helped by retail inflows.
Shares of banks and NBFCs fell sharply after the Reserve Bank of India (RBI) tightened norms for consumer credit as it asked them to assign a higher risk weight to unsecured personal loans, a move aimed at making lenders more wary of such advances.
On Friday, frontline indices ended in the red on weak signals from the Asian markets and witnessed extremely volatile trading trends. However, the broader market outperformed the benchmark indices in the session.
Read also: These 50-cap stocks rose 15-50% as Sensex registers third weekly gain led by IT; do you own
The 30-share BSE Sensex ended lower by 187.75 points or 0.28 percent at 65,794.73 level while the Nifty 50 closed at 19,731.80 level, down 33.40 points or 0.17 percent. The broader market closed higher than the benchmark indices in Friday’s session, with the Nifty Midcap 100 closing 0.20 percent higher and Nifty Smallcap ending flat or 0.09 percent higher.
“Domestic markets ended the week on a positive note, supported by global cues and favorable Indian macroeconomic indicators suggesting inflation under control. Softer-than-expected inflation figures in the US, UK and at home boosted investor optimism, bolstering hopes for inflation. end to interest rate hike cycle. This sentiment drove gains across the broader market, especially in small and mid-cap stocks.,” said Vinod Nair, Head of Research at Geojit Financial Services.
”Confidence in export-oriented sectors such as IT and Pharmaceuticals has resurfaced, anticipating increased spending, while the automobile and real estate sectors gained favor during the festival season. The market is expected to maintain its positive momentum in the near term, supported by falling oil prices and moderating US yields,” added Nair.
Going forward, a busy week awaits the mainstream market as some major initial public offerings (IPOs) and listings are planned across the main board and small and medium enterprises (SME) segments. The week will be decisive from the domestic and technical point of view, as investors will closely watch the global signals along with domestic economic data.
Overall, analysts believe that global trends largely dictate the market direction and will continue to keep investors on their toes in the coming week as well. Nifty 50 is likely to support net positive foreign capital inflow along with sharp decline in oil prices and moderating US bond yields.
Here are the key triggers for stock markets in the coming week:
6 new IPOs, 1 listing to hit D-Street:
In the mainboard segment, five new IPOs open for subscription in the coming week. IREDA IPO will open for bidding on November 21.
Tata Technologies IPO, Gandhar Oil Refinery India IPO, Fedbank Financial Services IPO and Flair Writing IPO open for subscription on November 22.
In the SME segment, Rocking Deals Circular Economy IPO will open for subscription on November 22. Among new listings, shares of Sunrest Lifescience will be listed on NSE SME in the coming week.
FII Activity:
Foreign institutional investors (FIIs) broke their selling streak on November 15 after US consumer price index (CPI)-based inflation eased in October, leading to a significant decline in US 10-year bonds to 4.45 percent.
However, the total foreign capital outflow stands at ₹7,630 crore in the first half of November. The domestic institutional investors (DIIs) won the draw of war and remained net buyers in the first 15 days of the month.
Foreign portfolio investors (FPIs) finally reversed their selling streak this month after being net buyers till November 15. During August, September-October and till November 15, FPIs cumulatively sold shares for ₹83,422 crore through the exchanges.
”FIIs have observed some buying activity in the last few days, and there is potential for an acceleration in their buying momentum amid falling US bond yields and the dollar rate,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Global Directions:
US inflation fell sharply in October to 4.6 percent from 6.7 percent encouraging markets and reducing the risk of further rate hikes by the Federal Reserve in the near term. ”This could attract FII flows to emerging markets amid the surge in festive demand and a good quarterly earnings season,” said Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd.
The domestic market will take cues from US existing home sales, initial jobless claims, US manufacturing and services PMI, Federal Open Market Committee (FOMC) minutes, UK manufacturing and services PMI. Investors will also focus on US bond yields, crude oil inventories and the rupee’s movement against the dollar.
”Global indications largely dictate the trend and we expect this trend to continue in the coming week as well. Among all major indices, the US markets are showing remarkable strength and have recovered considerably in the last three weeks,” said Ajit Mishra, SVP – Technical Research, Religare Broking.
”The Dow Jones Industrial Average (DJIA) may be calming down after the recent rally, but we expect the tone to remain bullish. The next major hurdle would be at the previous swing high ie 35,679 and any decline in 34,300-34,600 zone would attract buying interest,” Mishra added.
Oil Prices:
Oil prices jumped more than 4 percent on Friday, rebounding from a four-month low hit in the previous session, as investors who took short positions took profits and amid U.S. sanctions on some Russian oil shippers lent support.
Brent crude futures rose $3.19, or about 4.1 percent, to $80.61 a barrel, while West Texas Intermediate (WTI) rose $2.99, or 4.1 percent, to $75.89, according to Reuters news agency.
Some of the losses were offset after the United States imposed sanctions this week on shipping companies and ships for shipping Russian oil sold above the Group of Seven (G7) price limit.
However, both benchmarks ended the week more than 1 percent lower, their fourth straight weekly decline, largely weighed down by a rise in US crude inventories and continued record high production.
The OPEC+ group, made up of the Organization of the Petroleum Exporting Countries and its allies, intends to consider whether to make further cuts in oil supply when the group meets on November 26.
Corporate Activity:
Shares of several companies to trade ex-dividend in the coming week including Coal India, Oil and Natural Gas Corporation (ONGC), Oil India, Aurobindo Pharma among others will trade ex-dividend in the coming week, starting Monday, November 20. Tata Consultancy Services (TCS) will declare a share buyback on November 24. Check full list here
Technical View:
On the domestic front, investors may see some consolidation in Nifty after testing 19,850 however the bias would remain positive, according to investors. ”A decisive break above that level would help the index to inch towards the record high ie 20,222 levels. On the downside, the 19,300-19,500 zone would offer a cushion in case of any dip,” said Religare’s Ajit Mishra.
Santosh Meena of Swastika Investmarts said, “From a technical point of view, Nifty currently finds itself in a brief consolidation phase, facing a significant hurdle around the 19,850 mark before a possible big rally.”
”Amidst all, the underlying performance of the banking pack may continue to weigh on sentiment, however buoyancy in other sectors will continue to offer buying opportunities. In addition, traders can selectively look for long trades from the mid-cap and small-cap pack as well,” added Ajit Mishra.
Bank Nifty is exhibiting underperformance, however, a compelling demand zone is emerging at 43,400-43,300, marked by the convergence of the 20-day Moving Average (20-DMA) and the 200-day Moving Average (200-DMA), suggesting a possible rebound.
“Following the RBI’s announcement of tightening provisions for consumer loans, Bank Nifty’s next support lies at the 43,300-43,250 zone, acting as a crucial line of defense for the bulls,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.
”If this level holds, it could pave the way for a possible recovery to the 44,000 mark. However, a breach of the said support may intensify selling pressure, taking the index further down to the 42,700 level below,” Shah added.
Disclaimer: The views and recommendations above are those of individual analysts and second-hand companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
Milestone Warning!Livemint tops charts as the fastest growing news site in the world 🌏 Click here to know more
Catch all Business News, Market News, News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More or less
Updated: 19 Nov 2023, 06:12 IST