After relentless selling in recent days, Nifty has temporarily paused its decline due to an oversold chart setup, Rupak De, Senior Technical analyst at LKP Securities said, adding that the index closed significantly below the critical breakdown level of 19,250. As long as it stays below 19,250, the market may continue to be inclined towards selling on any upward movements, he opined as he sees a further downside opening below 18,800 if weakness continues from here, he added.
“This is because put writers are likely to defend Nifty with substantial positions at 18,800, with immediate support placed at 19,000,” he reasoned.
Factors that are likely to impact movement when markets reopen this week:
1. Fed FOMC
The US Federal Reserve’s two-day Federal Open Market Committee (FOMC) meeting will begin next week on Tuesday and the Central Bank is expected to keep interest rates unchanged at 5.25-5.50%. Global stock markets will be keenly watching its commentary on the future interest rate trajectory and the US economy.
The Bank of England (BoE) will also come out with its policy rates as well, during the week.
2. US Markets
The US markets ended mixed on Friday. While Dow 30 fell 367 points or 1.12% to 32,418, the S&P 500 closed at 4,117, down 19 points or 0.48%. Meanwhile, the Nasdaq Composite settled 47 points or 0.38% higher on an uptick in Amazon shares at 12,643.
When Indian markets reopen on Monday, they will take cues from the Friday closing of the US markets. They will also track movement in GIFT Nifty futures on Monday. The latter is an early indicator of movement in the Nifty50.
3. Global Macros
Apart from the Fed rate decision, the US will publish global manufacturing PMI, initial jobless claims data, S&P Global Composite data and Services PMI data. The UK will announce S&P Global/CIPS manufacturing data. As for the Eurozone, economic confidence, consumer confidence, CPI, GDP, and manufacturing data.
China will declare its composite, manufacturing, and non-manufacturing PMIs along with Caixin China PMI manufacturing and services, Composite PMI data.
India will publish its fiscal deficit data along with S&P Global PMI manufacturing and Services data and Composite PMIs.
4. Q2FY24 Earnings
The Street will be monitoring the quarterly earnings of Bharti Airtel, Sun Pharmaceuticals, Hero MotoCorp, Tata Steel, Britannia Industries, Tata Motors, Adani Enterprises and Titan Company among others. It will also be reacting to earnings posted by NTPC, IDFC First Bank and UPL who declared their results during the weekend.
In the non-Nifty pack, JSW Infra, Manoj Vaibhav Gems, Yatharth Hospitals and Gland Pharma will report their September quarter earnings.
Among global earnings, Apple will declare its September quarter results.
5. Rupee Vs Dollar
The Indian rupee ended little changed after trading in a narrow range on Friday on a lack of fresh triggers and amid intermittent dollar sales by the central bank to prevent a fall towards the record low. The rupee closed at 83.2450 against the US dollar compared with its close at 83.23 in the previous session.
“We will be having FOMC and BOE deciding on interest rates on 1st and 2nd respectively Then on the 3rd the Mother of all data’s NFPR will be released. So it is going to be a data-oriented and volatile week as market factors in the Israel-Hamas clashes and watches with interest the other nations supporting or entering into the fighting,” Anil Kumar Bhansali, Head of Treasury and Executive Director
Finrex Treasury Advisors LLP said.
“Exporters may sell $ for 2 weeks and hedge themselves keeping receivables beyond 2 weeks open so that any opportunities above 83.30 can be encashed if RBI allows it. Keep a stop loss of 83.05 for unhedged positions. Importers need to buy all dips and major dips if they get to hedge their payables with a stop at 83.30 for all unhedged positions,” Bhansali said.
6. Corporate Action
October auto sales numbers will be announced on November 1. Safari Industries, PDS, Solar Industries and Nilkamal to mull fund raise and bonuses. Godawari Power, Ispat to consider stock split.
7. IPOs
Expect action in the primary markets with 2 mainboard IPOs opening next week and two SME IPOs.
Mamaearth parent Honasa Consumer IPO will open for subscription on Tuesday, October 31 at a price band of Rs 308-324 per share. Cello World IPO will also open for subscription on Monday, October 30 at a price band of Rs 617-648.
In the SME segment, SAR Televenture IPO will open on Wednesday, November 1 at Rs 52-57. Transteel Seating Technologies IPO will open on Monday, October 30 at an issue price of Rs 67-70.
8. Technical Factors
Nifty’s six-session fall has been on the back of a slew of factors including escalating conflict between Israel and Hamas, a surge in US 10-year bond yields, and the sustained selling by FIIs, which sold around 13,186 crores in the cash market this week, Arvinder Singh Nanda, Senior Vice President, of Master Capital Services said.
“Nifty prices are currently trading above their 50-week EMA. With the validation of this support line, we anticipate prices to move within the range of 18,600 to 19,250, revealing a sideways to lower tendency,” Nanda said.
As for Bank Nifty prices are relatively more bearish than Nifty as they dropped below their crucial support area and 50-week EMA, he informed. Based on its positioning on the technical charts, he recommends a sell-on-rise strategy. On the lower side, 42,000 will act as immediate support while a gain towards 43,500-43,800 will accelerate selling pressure, he opined.
9. FII / DII Action
FIIs and DIIs will be crucial in how markets perform on Monday. On Friday, foreign institutional investors were net sellers and shed Indian equities worth Rs 1,500.13 crore. Meanwhile, domestic institutional investors (DIIs) were net buyers at Rs 313.69 crore.
10. Gold
Bulls in Gold and Silver traded with a new vigour last week as the yellow metal hit five-month highs. On Friday, the December Gold futures ended at Rs 61,260, up by Rs 308 per 10 grams or 0.51% over Thursday’s closing price. As for December Silver futures, the closing was at Rs 71,802 per kg and was up by Rs 222 or 0.31%.
On the Comex, Gold futures ended at $2,016.30, gaining $18.90 or 0.95% while Silver futures were up by $23.240 , gaining $0.332 or 1.45%.
“From a technical standpoint, COMEX gold closed the week above the double top resistance near $2,009 per troy ounce. This suggests a bullish outlook, with the potential to target all-time highs near $2,085-$2,090 per troy ounce, a formidable multiple resistance zone. Downside support is anticipated at $1,965 per troy ounce,” Ravindra V Rao, Vice President-Head Commodity Research at Kotak Securities said.
(Inputs from Agencies)
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