FII flow, F&O expiry and auto sales data among key factors that will guide market this week

FII flow, F&O expiry and auto sales data among key factors that will guide market this week

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NEW DELHI: After a week that saw the biggest single day crash in seven months, benchmark indices eventually ended flat, much thanks to continued support of foreign institutional investors and passage of a $900 billion stimulus in the US.
During the holiday-truncated week, Sensex inched up 12.85 points, or 0.02 per cent, while Nifty slipped 11.30 points, or 0.08 per cent.

This week, which is also the last in calendar year 2020, similar factors may guide the market. New virus strain in Europe and South Africa is creating havoc while volumes may be affected due to the holiday season. Besides, the week will also see the listing of another IPO, and auto companies will announce monthly sales figures.

“For the week ahead, concerns regarding the fresh case of the virus will remain in the limelight along with the development on Brexit deal. Investors should stay focused on quality sectors & counters and also watch at the trend of FII inflows, which is the main factor of the recent rally. No eventful data and announcements are expected next week,” said Vinod Nair, Head of Research at Geojit Financial Services.

Here are key factors that may guide the market this week:

New strains of coronavirus
Even as vaccines are being deployed at a swift speed, a couple of more infectious strains of coronavirus has led to harsher restrictions in Europe. Besides, many countries, including India, have banned flights to and from the UK. However, there is no word on if the flight ban will be extended beyond December 31, if the situation does not improve.

IPO listing: Antony Waste
Antony Waste Handling IPO is likely to be listed on January 1, becoming the first debut on Dalal Street in the new year. The issue was subscribed 15 times, much less than some other IPOs that have come in the recent past, because its grey market premium came down sharply. The portion for retail investors was subscribed 16.54 times, non-institutional investors 18.68 times, and the portion set aside for qualified institutional buyers was subscribed 9.67 times.

F&O expiry
Futures and options contracts for the December series will expire on Thursday. Traders can expect volatility leading up to the day. India VIX, trading near 20, is at a relatively high level, even though it has softened in the last few days.

Holidays: Volumes may fall
With Christmas and New Year holidays, many traders, especially foreigners, are expected to be on vacation, which may bring down the volume on bourses. Due to the new margin rules, volumes in F&O segments have already reduced.

Auto sales data
Auto companies will also come out with their monthly sales data this week, leaving to movement in individual stocks. After a full recovery in sales in the last couple of months, passenger vehicle makers hope to continue the momentum. Moreover, commercial vehicle makers would also expect some recovery in sales as the country opens up more.

FII inflows
Foreign institutional investors (FIIs) have continued their exuberance for Indian equities and have bought Rs 56,643 crore worth of shares in December so far, as per NSDL data. This comes on top of Rs 60,358 crore investment in the previous month. In the last week of the year, their movement will be keenly tracked by marketmen.

Technical outlook
After a sharp fall on Monday, Nify50 managed to regain most of its losses but still closed the week on an almost flat note following seven consecutive weeks of a higher close. Nifty IT and pharma remained the top sectoral gainers while most of the other sectoral indices closed in the red.

“The sharp sell-off on Monday was a clear sign that the bulls are getting exhausted and the market is overstretched on the upside in the short term. The immediate support on the downside is now established at 13,130 and any break below the same would lead to short term weakness in benchmark indices. The immediate resistance on the higher side is now placed at 13,775,” said Nirali Shah, Senior Research Analyst, Samco Securities.

Macro data
The government will release a series of macro numbers this week that may be watched by investors and economists to gauge the pace of recovery and government finances. They include budget value for November, November infra output, current account and external debt data.

Loan growth data
The Reserve Bank of India (RBI) will also release deposit and loan growth data for the fortnight ended December 18 that will be eyed by investors and traders. Besides, the central bank will release forex data for the week ended December 25 on January 1, which may have an impact on currency markets.

Credit: Stocks-Markets-Economic Times

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