Exit polls, GDP data, F&O expiry, auto sales to guide market direction this week

Markets consolidated in a narrow range and ended marginally higher, taking a breather after the recent surge. After the muted start, the benchmarks tried to regain strength in the following sessions but mixed signals from the global front and divergence among the heavyweights capped the move.

On the weekly front, the BSE benchmark climbed 175.31 points or 0.26 per cent, and the Nifty advanced 62.9 points or 0.31 per cent. The more domestically focussed small-caps lost 0.39 per cent this week, and no longer outperformed the blue-chips. Small- and mid-caps have gained 42 per cent and 33 per cent, respectively, so far in 2023, outperforming a 9.33 per cent rise in Nifty 50.

Also Read: IPO pulse grips D-Street: 2.59 lakh crore gathered by 5 issues in week-long bidding frenzy

On Friday, Sensex and Nifty 50 ended flat weighed down by a slide in information technology (IT) and fast-moving consumer goods (FMCG) stocks in the midst of mixed global cues. The 30-share BSE Sensex ended lower by 47.77 points or 0.07 per cent at 65,970.04 level on November 24 while the Nifty 50 closed at 19,794.70 level, down 7.30 points or 0.04 per cent.

Despite the lack of significant movements, the Nifty 50 managed to extend its weekly winning streak, closing just below the 19,800 mark. The Nifty 50 has settled above 19,600 levels in every session since November 14, but has faced resistance at 19,800-19,900 levels. On the broader market front, the Nifty Midcap 100 closed flat, while the Nifty Smallcap 100 closed 0.30 per cent higher than the benchmark indices. 

Vinod Nair, Head of Research at Geojit Financial Services said, ‘’The broader market experienced some profit booking as investor attention shifted to the primary market, marked by a set of IPOs in the week. Sectors such as consumer durables and realty took the lead, driven by a strong rebound in festive demand. However, the IT sector showed subdued performance in response to weak global data. Despite the RBI’s scrutiny of unsecured lending by NBFCs, the banking index demonstrated resilience this week.”

Going forward, a busy week awaits the primary market after the initial public offerings (IPO) that opened last week across the mainboard and small-and-medium enterprises (SME) segments are all set to move to allotment stages. The week will be crucial from the technical point of view as investors will closely eye the political developments for exit poll results along with domestic economic data.

Also Read: Over 45 smallcap stocks rose 10-30% as Sensex logs fourth straight weekly gain; do you own?

Overall, analysts expect volatility to remain high due to the scheduled expiry of November month derivatives contracts, but expect the benchmark Nifty 50 to breakout above the 19,850-mark in the upcoming holiday-shortened week. Week ahead, the final two sessions are expected to bring dynamic movement in markets over key domestic triggers.
 

Here are the key triggers for stock markets in the coming week:
 

Macro Data, Exit Polls, Auto Sales:

On the macroeconomic front, India’s gross domestic product (GDP) for the third quarter will be released on November 30, 2023. The infrastructure output data for October will be released on the same day. The S&P Global Services PMI for November will be declared on December 1. 

Auto stocks will be in focus as auto companies will announce their monthly auto sales numbers for November on December 1, 2023. This will be crucial with respect to Diwali sales figures.

This week stock markets may experience some direction and increased volatility ahead of the November month F&O expiry – due on Thursday, according to analysts. On November 30, exit polls for the state elections will also be revealed, which is likely to impact market movement on Friday. Liquidity is tied up in primary markets due to the recent surge of IPOs.

Also, foreign Direct Investment in India fell 7.3 per cent in the July-September quarter to $ 9.54 billion due to a sharp fall in inflows into computer software and hardware sectors, trading and construction. 

‘’Foreign direct equity investments in India have experienced a significant downturn, recording a 24 per cent decline to $20.5 billion during the first half of the financial year 2023-24,” noted Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

 

5 new IPOs, 2 listings to hit D-Street:

In the SME segment, five new IPOs are opening for subscription in the coming week, and two companies will get listed. Swashthik Plascon IPO will close on November 29.

Deepak Chemtex IPO and AMIC Forging IPO are opening on November 29 while Net Avenue Technologies IPO, Graphisads IPO, and Marinetrans India IPO will open for bidding on November 30.

Shares of Arrowhead Seperation Engineering IPO will get listed on BSE SME on November 28, while Rockingdeals Circular Economy IPO will get listed on NSE SME on November 30.

 

FII Activity:

Foreign institutional investors offloaded in Indian equities for three day last week and invested in the final two sessions. Foreign portfolio investors (FPIs) have finally reversed their selling streak this month, after emerging as net sellers in August, September and October.

FPIs have bought 378 crore worth of Indian equities and the total inflow stands at 13,673 crore as of November 24, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.

FPIs were net buyers till November 15, but reversed the selling trend and invested on November 15 and 16. During August, September October and till November 15, FPIs cumulatively sold stocks for 83,422 crore through the exchanges.

‘’The US bond yields have declined sharply with the 10-year benchmark bond yield correcting from 5 per cent in mid October to 4.40 per cent now. This has forced the FIIs to slow down their selling. Importantly, they were buyers on four days this month with a big buying of 2,625 crore on Friday, the 24th,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
 

Global Cues:

The market will cues from US building permit data, US new home sales data, US GDP data, Crude oil Inventories, US Core PCE Price Index, US PMI data and Eurozone core CPI data. Crude oil prices will be keenly eyed by investors as the Organisation of Petroleum Exporting Countries and it allies (OPEC+) will announce its oil output policy decision on November 30. 

‘’While global cues are relatively muted, market participants will closely monitor movements in crude oil prices, US bond yields, and the dollar index,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

The US Federal Reserve reserve adopted a cautious stance and the muted trend in European and German markets was also echoed in domestic markets. Declining inflation and recent cooling job data in the US, along with easing US bond yields, attracted foreign funds to the emerging market.

‘’We are closely Eyeing the performance of the US markets for cues and indications are in favor of the prevailing upmove to continue. We are expecting the Dow Jones Industrial Average (DJIA) to inch toward the previous swing high i.e. 35,679 and the 34,800-35,000 zone would restrict the decline in case of any profit taking,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

 

Oil Prices:

Oil prices declined in the previous session after the release of some hostages in Gaza reduced the geopolitical risk premium, but prices notched their first week of gains in over a month ahead of the output policy decision by the OPEC+.

Brent crude futures settled down 84 cents, or 1 per cent, at $80.58 a barrel, while US West Texas Intermediate crude fell $1.56, or 2 per cent, from Wednesday’s close to $75.54, according to news agency Reuters.

Both contracts had their first weekly gain in five weeks as OPEC+ prepares for its meeting that will have output cuts high on the agenda. The OPEC+ group surprised the market last week by delaying its November 26 to November 30.

This came after the oil producers struggled to reach a consensus on output levels. The surprise delay had initially brought Brent futures down as much as 4 per cent and WTI by 5 per cent on Wednesday.
 

Corporate Action:

Shares of three companies including Milkfood Ltd, Veeram Securities, and Talbros Automative Components Ltd among others will trade ex-dividend in the coming week, starting from Tuesday, November 28. Additionally, shares of SAPC will declare a rights issue of equity shares and Alphalogic Industries Ltd will trade ex-bonus in the coming week. Check full list here
 

Technical View:

Analysts have been seeing time-wise correction in the Nifty and eyeing a possible breakout above 19,850 next week, which would help the index to inch towards a newer high. 

‘’On the downside, we expect the 19,350-19,550 zone to offer support if profit taking deepens. Though the banking index is also trying to recover its lost ground, we suggest focusing on the other sectors for long trades until it decisively reclaims the 44,100 mark,” said Religare Brokings’ Ajit Mishra.

‘’We may see a marginal fall in the broader indices too but the tone is likely to remain positive so traders can utilize the dip to selectively add quality names from the midcap and smallcap basket too,” added Mishra.

The sentiment is anticipated to stay sideways as long as it holds above 19,700. However, a drop below 19,600 might exert downward pressure on the Nifty, according to Master Capital Services’ Arvinder Singh Nanda. 

‘Bank Nifty, which had been underperforming, is currently exhibiting signs of recovery, bouncing back from its 200-DMA level of 43,300. ‘’The 50-DMA, located at 44,000, presents an immediate hurdle, while 44,400 stands as a critical hurdle,” said Swastika Investmarts’ Santosh Meena.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions. 

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Updated: 26 Nov 2023, 06:11 AM IST

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