Heads up! Top 10 factors that will drive market direction in Diwali week

The Indian markets closed with losses of over 2 percent for the week ended October 29 as the bears took control pushing the benchmark indices below the crucial support levels.

The S&P BSE Sensex closed below 60,000, while the Nifty50 also gave up 18000 in a major selloff from foreign institutional investors (FIIs).

Experts see the market to consolidate in the holiday-shortened week amid weak global cues, muted earnings from India Inc., US Fed meeting triggers, and selling by FIIs.

“The markets are expected to remain bearish in short term due to profit booking across various sectors and weak global clues. The Q2 result season is in progress with the market getting mixed responses from companies declaring their results,” Rahul Sharma, Co-Founder, Equity99, said.

“For the next week, 17500 will act as crucial support for the Nifty on breaking which 17350 will act as the next support post which we might see17200 levels,” he said.

Sharma further added that on the upper side, 17800 will act as crucial resistance on being which we might regain 18000 levels and if it is broken we`ll see 18200 levels.
 
We have collated a list of 10 factors that will drive the market direction in the coming week:

Auto Numbers:

Automakers, as well as two-wheeler companies, will report their monthly sales number for October. Passenger vehicle wholesales in India witnessed a 41 per cent year-on-year decline in September as semiconductor shortage hit production leading to a drop in supplies from manufacturers to dealers, auto industry body SIAM said.

Dhanteras:

The Dhanteras in 2021 will be celebrated on November 2. The Dhanteras Puja Muhurat will be from 5.42 PM to 7.31 PM. Dhanteras festival is considered as one of the most auspicious occasions to buy many items.

Not just auspicious, but it is also considered the best time to buy new things especially, gold, automobiles and other products.

Muhurat Trading:

The National Stock Exchange (NSE) will hold Diwali Muhurat Trading on November 4, 2021, on the auspicious occasion of Diwali.  

Muhurat trading is the auspicious stock market trading, which is conducted for an hour on Diwali (Deepawali), by the stock market exchanges.  

NSE Muhurat Trading session will kickstart at 18:15PM on November 4, while the pre-open session will remain in business between 18:00 to 18:08 IST.  

US Federal Reserve Meet:

The big event which will be watched by market participants across the globe is the 2-day US Federal Reserve Policy meeting, which will start from November 2, and any clarity on stimulus tapering will be closely watched.

“Globally, the outcome of the US Fed meeting on 3rd November will be the most important cue where it will be important to see how Fed will react amid rising inflation and slow-down in growth momentum. Rising Covid cases globally is another concern for the market,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

Selling by FIIs:

Foreign institutional investors have already pulled out more than Rs 25000 crore in the cash segment of the Indian equity markets in October. If the selling pressure continues, the index could retest crucial support levels in November.

“The sell-off can be attributed to relentless selling by FIIs, where they have sold worth Rs 15700 crore last week in the cash market while they sold around Rs 25500 Crore in October,” said Meena.

“FIIs are not selling in the Indian market because of any negative cues while recent strong outperformance by the Indian market is leading to mean reversion where recently Morgan Stanley and Numora downgraded Indian Markets to equal weight as a tactical shift,” he said.

Micro Data:

Apart from the monthly auto sales numbers on November 1, investors will also track the Manufacturing PMI data on Monday, followed by Balance of Trade data on November 2nd, and Services PMI data on November 3.

“India’s manufacturing and services PMI data, releasing next week, will be a key indicator in determining the economic progress for the month of October,” Vinod Nair, Head of Research at Geojit Financial Services, said.

3 IPOs to Hit D-Street:

The primary market will remain in focus in the coming week as well. Three IPOs will hit the D-Street to raise over Rs 6,000 cr in the coming week.

Sigachi Industries is planning to mop up Rs 125.43 crore at the upper end of the price band of Rs 161-163 per share.

SJS Enterprises, one of the leading players in the Indian decorative aesthetics industry plans to raise Rs 800 crore through its public issue, and PB Fintech, the operator of online insurance aggregator Policybazaar, plans to raise over Rs 5700 crore.

Quarterly Results:

More than 300 companies will report their results for the quarter ended September. The September quarter has been a mixed bag for India Inc.

“The earnings season would also gain pace and stocks like IOC, HDFC, Tata Motors, Bharti Airtel, Hind Petro, Sun Pharma, SBI and Eicher Motors will announce their numbers during the week,” Ajit Mishra, VP Research. Religare Broking, said.

OPEC Meeting:

Ministers from the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies - collectively known as OPEC+ - meet on Nov. 4 to decide output policy, said a Reuters report. Brent crude is trading near $84.38 a barrel.

"Another event that will be focused on is the OPEC+ meeting scheduled on November 4. The organization is likely to stick to its plan of adding 400,000 barrels per day of supply each month until April 2022," Dharmesh Shah, Head – Technical, ICICI direct, said.

Outlook for November Series:

The Nifty50 lose over 2 per cent for the week ended October 29 as the bears took the control of the D-Street pushing the index below 18000 on a closing basis.

The broader indices also traded in sync with the benchmark and shed nearly 2% each. On the benchmark front, the Sensex and the Nifty closed at 59,306.93 and 17,671.65, respectively.

Based on the rollover data, the Nifty saw a highest rollover of 82.31 per cent, compared to the 3-months average of 80.42 per cent, while the Bank Nifty saw a rollover of 80.37 per cent, compared to the average of 80.98 per cent.

Meanwhile, the FIIs action have been negative on the October series with a net sell of Rs. 20,429 crores in the cash segment. However, the DIIs have bought around Rs. 128 crores.

On the options front for the November series, the data suggest the highest Open Interest with 39234 contracts in Nifty 17500PE, followed by 18000PE with 30806 contracts.

While, on the CE side, the highest Open Interest is at 19000 strike prices with 40624 contracts followed by 18500 CE with 33,480 contracts, which indicates a broader range, suggest experts.

“Investors should keep an eye on FII & DII activities along with the global data & events. On the technical chart, the Nifty index has been trading in the uncharted territory along with the volatile movement,” Palak Kothari, Research Associate at Choice Broking, said.

“Investors should focus on Cement, Fertilizer & Realty stock, which can give good returns in the November series. Overall, the Nifty is having good support at around 17400 levels while on the higher side, once Nifty settles above 18000 levels, we can expect potential upside till 18400/18600 level as well,” added Kothari.

Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.