F&O expiry, FII flows among 9 factors that will steer market this week

Upbeat US retail sales data for October and hawkish comments from the Fed officials over the rate hike trajectory dented the market sentiments. Back home, domestic inflation moderated mildly but remained above the RBI’s tolerance level.

The Indian markets have been showing resilience when the global indices, especially the US markets, were facing the heat, said Ajit Mishra, VP – Research,

Broking.

“They are now largely aligned, and we have considerable strength in the prevailing trend,” he added. “We can’t ignore the possibility of further consolidation citing mixed trends across sectors and restricted participation from the index majors.”

On a sectoral front, public sector lenders outperformed, followed by some buying action in IT, telecom, infra and realty stocks. Auto, utilities, power, energy, metals and consumer durable players were the top laggards.

“We expect a recovery starting 3QFY23 led by softening commodity prices and monetary easing by central banks, which is likely to boost demand,” said Mitul Shah, Head of Research at

Securities.

The Fed is unlikely to slow the pace of its interest-rate increases in the near term, which can impact the market, he added. “India is likely to see a multi-year economic upcycle led by strong macros and various government initiatives.”

Here are nine factors that are likely to guide the markets this week:

F&O expiry
The monthly derivative contracts for the November series will expire on November 24. The scheduled monthly derivatives expiry will keep the volatility high at Dalal Street and keep the traders on their toes.

Geopolitical crisis
The ongoing war crisis between Russia and Ukraine is likely to keep the traders on tenterhooks. The recent missile attack in the eastern part of Poland near Ukraine’s borders jolted the world, raising alarms about a possible escalation of the war in Ukraine.

Fed member’s commentary
Amid the absence of major economic events in the next week, markets will react to the commentary of US FOMC members. As many as four FOMC members are likely to speak in the holiday truncated week.

New debuts
After a busy IPO season and a handful of listings, Dalal Street will be busy welcoming new debutants. As many as five companies will list at the bourses this week.

On Monday, Archean Chemical Industries and Five Star Business Finance will get listed, followed by the debut of Kaynes Technologies on Tuesday.

Green Energy Services will list on Wednesday, whereas trading in Keystone Realtors begins on Thursday.

Crude oil
Crude oil prices have been declining lately as they dropped for the second week due to concern about weakened demand in China and further increases in US interest rates. Brent slipped below $88 per barrel, whereas US West Texas Intermediate (WTI) crude settled just above the $80 a barrel mark.

Crude oil and some base metals seem to be working in tandem, and a little bit of bad news created more turbulence and sell-offs. That was really the main factor at play,” Peter McGuire, CEO, XM Australia, told ET Now.

Rupee movement
The cooled-down dollar index has supported the domestic currency as the rupee depreciated 10 paise to close at 81.74 against the US currency on Friday.

“The greenback gained momentum after US Treasury yields increased and investors eyed hawkish comments from Federal Reserve officials,” Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal

Financial Services, told PTI.

FPI flows
After some muted action in October, global investors turned buyers in the Indian equity markets this month. In November so far, FPIs picked up domestic shares worth about Rs 30,400 crore.

FPI buying in IT, which started picking up pace in the second half of October, gathered momentum in November. FPIs have been buying in autos and telecoms, said V K Vijayakumar, Chief Investment Strategist at

.

FPI buying is unlikely to turn aggressive, he cautioned. “High valuations in India are a headwind. Valuations in markets like China, S Korea and Taiwan are very attractive now. So, more FPI money is likely to move to these markets.”

Technical Outlook: Nifty
Technically, intraday reversal formations and bearish candles on weekly charts indicate indecisiveness between the bulls and bears. Further to our perception, the medium-term index formation is still positive, said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities.

“Hence, buying on short-term corrections and selling on rallies would be the ideal strategy for the traders. 18,200 would act as a key support zone. On the flip side, 18,400 and 18,550 could be the important hurdles,” he added.

Technical Outlook: Nifty Bank
The Nifty Bank witnessed a volatile trading session, as the first half was controlled by bears, and in the closing hours, bulls returned to hold the support, said Kunal Shah, Senior Technical Analyst,

.

“The bulls to gain back the momentum will have to take the index above 42,600-42,700 levels from where the uptrend will resume,” he added. “The bears will watch for 42,000 on the downside if breached and will get an upper hand on the index, which will drag it further down toward the 41,500 level.”

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)