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Momentum could continue towards 11,800..


Gaurav Bora, Market Expert

Momentum is continued for sixth consecutive week. Nifty gained 1.8% and Sensex gained 1.5% in last week. While Midcap & Smallcap index outperformed gained 3.7% and 5.4% respectively. The performance of Midcap and Smallcap will also be closely watched in the coming week as both indices outperformed benchmark indices after underperformance seen in 2018 and 2019, some of FIIs money flowing into these stocks. Auto, banking, nbfcs, metals and infra stocks major beneficiary last week but defensives stocks like IT and pharma saw profit booking. Stock markets are currently running on hope normalisation and liquidity, trader should remain stock specific. Earnings from frontline companies across segments are almost over, but as companies are allowed to declare their June quarter earnings till September 15. FIIs were net buyers during entire week bought equities worth 2,068 crore whereas DIIs sold equities worth 2,117 crore, FIIs interest in India continues due to further re-opening of the economy and the government’s plans for a second COVID fiscal stimulus. India has witnessed a consistent rise in COVID-19 cases with over 60,000 cases coming out each day for the passing week; India has so far recorded more than 30 lakh cases, which includes 56,000 deaths while recovery rate stands at 75%. On the vaccine front globally 4-6 vaccines are in Phase 3 where the testing is done on thousands of patients, while in India Serum Institute has started the Phase 2 & 3 clinical trials for its vaccine.

The August derivative contracts will get expired on coming Thursday Aug 27, hence there could be some volatility next week. The meeting of GST Council will be held on August 27, council will discuss the single-point agenda of compensation to states. Shares issued in the M&M Finance right issue will be listed on Aug 27; share price already adjusted nearly 45% from recent highs. MCX will be launching Bullion Index Future trading from Monday Aug 24. Media report that Saudi Arabia’s Public Investment Fund (PIF) has initiated discussion with Reliance Industries on investing as much as $1 Bn in Jio Fibre Assets.

Key factors for the week:

• Covid 19 pandemic remains a key factor to watch out for in the coming weeks.

• Aug F&O expiry on Aug 27.

• More than 300 companies will release their quarterly earnings which also included some Q4 earnings as well but the extended deadline to announce Q4 earnings will end on Sep 15. Important amongst them to watch out for would be IRB Infrastructure, Indraprastha Gas, LIC Housing Finance, Can Fin Homes, Procter & Gamble Hygiene etc.

Technical View:

Short to medium term trend remains positive but in the near term there could be some consolidation given the consistent run-up in equities and due to Aug F&O expiry. If Nifty sustains 11,500 levels then we may see rally towards 11,700 and 11,800. The maximum Put open interest shifted to 11,000 strike and is also likely to act as a major support in the coming week. Maximum call open interest at 11,500 followed by 11,600 and maximum put open interest at 11,000 followed by 11,200. Nifty could trade in the range between 11,200-11,800. Move above 11,500 could pull Nifty towards 11,800. India VIX reached to 19.94 levels during the last week, India VIX fell by 9% which is positive sign for the market.

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