The 30-share BSE Sensex advanced 439 points to 43,882 for the week ended November 20. Likewise, the 50-share Nifty index gained 139 points to 12,859. Meanwhile, Sensex and Nifty scaled their record highs of 44,230 and 12,963, respectively, during the week.
Vinod Nair, Head of Research, Geojit Financial Services, said, “Increased FDI inflows, progressing vaccine developments across the globe and a bounce back by the banking sector which is inching closer to pre-Covid levels took the market higher last week.”
Going by the buzz on Dalal Street, here are key factors that are likely to chart market direction in the coming week:
The upcoming week is likely to witness volatility as market participants will adjust their F&O positions as November series contracts will expire on Thursday, November 26.
FII inflows and rupee movement
Foreign institutional investors (FIIs), who have been on a buying spree since May, further lapped up shares worth Rs 44,378 crore in November till date. Any U-turn by overseas investors may put some pressure on the domestic equity market.
Jimeet Modi, CEO, Samco Securities & StockNote, said, “As soon as FPIs slow down their buying intensity before Christmas, the market may witness a healthy correction.”
The movement of rupee against the dollar will also be closely watched by market participants. The rupee on Friday appreciated by 11 paise to settle at over one-week high of 74.16 against the US dollar, supported by positive domestic equities and sustained foreign fund inflows.
Foreign exchange reserve data
Marketmen will be eyeing the foreign exchange reserves data to be announced on November 27. Forex reserves in India increased to $5,68,494 million by November 6 from $5,60,720 million in the previous week.
On the global front, investors will be eyeing macroeconomic reports from the world’s largest economy, United States, starting with Chicago Fed National Activity Index, Markit Services PMI Flash on November 23, followed by Redbook, Richmond Fed Manufacturing Index on November 24 and finally GDP Price Index, Corporate Profits, Jobless Claims, Goods Trade Balance, Michigan Consumer Expectations, FOMC Minutes, Baker Hughes Oil Rig Count on November 25.
Hopes of vaccine continued to support the market last week. Market participants will continue to watch the development. In the recent update, US-based biotechnology firm Moderna Inc said its vaccine candidate has been found to be 94.5 per cent effective in preventing Covid-19, based on Phase 3 trials.
“Market is expected to turn its focus to global events and progress in vaccine developments as we move to the end of the earning season accompanied by an absence of major domestic events in the week ahead,” Nair said.
Global markets struggled for momentum last week as the US election backed bull run came to a rest as the focus shifted to tightening restrictions driven by increasing Covid cases and uncertainty regarding the US stimulus package.
Nifty50 index has formed a bullish reversal pattern, which opened with a gap near the high point of the week and then gave up all the gains.
Modi of Samco Securities said, “The velocity of the rally has declined along with the volume participation. In fact, Nifty has been facing resistance at the rising channel, which is visible on the weekly chart, and might continue to struggle going ahead, as it lacks participation from the top index movers such as RIL, HDFC and banking stocks, who have become a bit stretched for the short term. We advise traders to keep an eye on the benchmark and go short unless Nifty breaks the rising channel on the upside.”
On the other hand, Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said, “The bears seem to have entered the market and the Nifty showed reversal from the new highs. Though the quantum of decline is not alarming for any significant change in the trend of the recent uptrend of the market, one may expect some more downward correction in the short term.”
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