Stock market outlook: F&O expiry, FIIs behaviour among top triggers to drive action on D-street next week

The Indian market ended with marginal gains for the week ended on August 19, after the benchmark indices witnessed sharp correction on Friday. The broader Nifty50 and 30-share Sensex gained 0.3% each in the holiday-truncated week after ending lower by over one per cent on Friday.  

As Q1 earnings' season has almost ended, the focus is expected to shift on F&O expiry, global cues, brent crude and FIIs buying or selling behaviour.  

"As the results season nears its end and there are also no significant macroeconomic events taking place in the coming week, the focus of the market will be on the FII trends and Brent crude," said Apurva Sheth, Head of Market Perspectives, Samco Securities. 

Over Rs 18,500 crore have been purchased by FIIs thus far in August owing to their buying frenzy, said Sheth. In light of recessionary worries, Brent crude prices are declining and are now trading at a six-month low of approximately USD 93.65, he said. "The markets will attempt to decipher the movements of the same in the future," he added. 

Santosh Meena, Head of Research, Swastika Investmart Ltd, said bulls are looking for some rest ahead of the F&O expiry after a stellar run in this series. It was a fifth straight week of gain for the Indian equity market, thanks to buying by FIIs and short covering, said Meena.  

"This week we have the August F&O expiry, where bulls are looking for rest after a gain of more than 6% in the series. There are not a lot of triggers, but global cues, August month F&O expiry, and FIIs' behavior will be important factors in the direction of the market," the expert added.  

Speaking on Nifty, Bank Nifty outlook, Meena said the Nifty is pausing near the psychological hurdle of 18000 whereas 18000-18100 is the resistance area and there is a risk of some profit booking as most of the momentum indicators are showing overbought reading, however, 17700 is an immediate and important support which bulls will try to protect. 

Below 17700, profit booking may see an extension towards the next demand zone of 17450-17200, he said.   

"As far as Bank Nifty is concerned, the banking index is witnessing profit booking from the level of 39750. However, 38800 is an immediate support level, where we can expect a bounce-back, while if it slips below 38800 level, then 38300-38000 will be the next demand zone," Meena added. 

Ajit Mishra, VP - Research, Religare Broking Ltd, who believes the markets may witness consolidation after five weeks of successive rise, also said the scheduled derivatives expiry will keep participants busy this week. Besides, global cues, especially from the US, and figures of foreign flows will remain on the radar, the expert said.