The Indian equity market ended lower in the week gone by as unfavourable global cues dented investor sentiment. Earlier than expected Fed tapering plans, rising delta variant COVID-19 cases globally, China’s regulatory tightening and slowing global growth weighed on investor risk appetite.

Share Market Live

NSE

Ending a two-week gaining streak, the 30-share BSE Sensex fell 0.2 percent, while the benchmark Nifty declined 0.5 percent in the week ended August 20. Nifty Bank also fell over 3 percent. Barring FMCG and IT, all other sectoral indices ended in the red for the week with Metals, Media, PSU Bank and Realty losing the most.

Broader markets continued to reel under pressure as the BSE Midcap index slipped 1.14 percent and Smallcap index declined 2.27 percent.

Analysts believe the volatility in the market to remain high next week due to the expiry of August month derivatives contracts along with the global cues including the COVID-19 situation and the performance of world indices.

Also Read:

Bottomline: With market in sell-off mode, pick your stocks with care

“Nifty may see further slide next week however the fall could be gradual, thanks to resilience in select sectors and index majors. It has the first line of defensive around 16,200 zone. In case of a rebound, the 16,550-16,700 zone would act as a hurdle. Earlier, the decline was largely restricted to the midcap and smallcap but it is now likely to cascade to the index heavyweights also,” said Ajit Mishra, VP Research. Religare Broking.

He recommends maintaining positions on both sides and suggest limiting naked leveraged positions.

Here are key factors that will guide the traders on Dalal Street next week:

Coronavirus and Vaccination

The active COVID-19 cases in India have declined to 3,53,398, the lowest in 152 days, while the national COVID-19 recovery rate has increased to 97.57 percent, the highest since March 2020, the ministry said. A reduction of 7,942 cases has been recorded in the active COVID-19 caseload in a span of 24 hours.

India reported 30,948 new coronavirus cases on August 22, taking the total tally to more than 3.24 crore. The death toll has climbed to 4,34,367 with 403 fresh fatalities, as per the Union Health Ministry data.

Meanwhile, the Drug Controller General of India (DCGI) gave emergency use authorisation (EUA) to Zydus Cadila’s three-dose COVID-19 vaccine ZyCoV-D, the world’s first and India’s indigenously developed DNA-based vaccine against the coronavirus disease to be administered in humans including adults and children aged 12 years and above.

Also Read: Zydus Cadila’s ZyCoV-D COVID-19 vaccine gets DCGI nod for emergency use

Listing

Three companies will make their debut on the bourses in the coming week after closing their initial public offering.

Nuvoco Vistas Corporation, the country’s fifth-largest cement maker will list its equity shares on August 23, Monday. The company’s public issue received 1.71 times subscription during August 9-11. As per

Aptus Value Housing Finance and Chemplast Sanmar are set to make a debut on the bourses in the coming week after closing the issue a week back.

Retail-focussed housing finance company Aptus Value Housing Finance and specialty chemical maker Chemplast Sanmar will list shares on August 24.

The IPO of Aptus Value Housing Finance was subscribed 17.20 times, while that of Chemplast Sanmar was subscribed 2.17 times during August 10-12.

According to IPO Watch data, the shares of Nuvoco Vistas were trading with no premium in the grey market, while Chemplast Sanmar and Aptus Value traded with marginal premium.

Also Read: IPO round up: Primary market route remains busy but this time with some caution

FII/DII flow

In the week gone by, the Foreign Institutional Investors (FPI) net sold Rs 4,314.4 crore worth of shares, taking the total net outflow to Rs 819 crore in August.

The domestic institutional investors remained net buyers as they net bought shares worth Rs 1,696 crore in August. DII’s net buying in the last week was Rs 162 crore.

“FPI flows are expected to be volatile, given FOMC meeting minutes suggesting increased tapering likelihood. Tapering is expected to have a substantial impact on global equity markets,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

Technical View

On the weekly chart, Nifty formed a small negative candle with a long upper shadow. Technically, this pattern signals the emergence of profit booking from the highs. Previously, such minor reversal on the weekly chart resulted in a broader high low range movement. Hence one may expect such market action in the coming weeks.

“The short term uptrend of Nifty seems to have reversed and one may expect some more weakness in the coming sessions. The next lower area of 16,250-16,300 levels could offer support for the market in the early next week and the market could bounce back from the lows by next week. On the higher side, intraday resistance is placed at 16,500-16,550 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Valuations

At current levels, the Nifty remains richly valued and the broader markets have started witnessing correction due to their overvaluation. Thus, the broader markets have underperformed the frontliners in August so far.

“Nifty valuations at around 21x 12m forward EPS remain rich and thus consistent delivery on earnings expectations going ahead become crucial. Hence, given the selling pressure in the broader market, the traders should be cautious and adopt stock-specific approach while investors can take advantage of this scenario and build their positions from the medium to long term perspective,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

Jackson Hole Economic Symposium

Investors will eye the Jackson Hole Economic Symposium to be held on August 26-28. The focus will be on “macroeconomic policy in an uneven economy.”

It is believed that Federal Reserve Chairman Jerome Powell may give insight on plans for tapering the $120 billion-a-month government bond-buying programme that has helped S&P 500 to double since its March 2020 lows. However, some investors believe that the Fed will see more data before announcing any plans.

Read here: Jackson Hole Economic Symposium: Place where central bankers meet; here's why global investors are interested

Crude Oil Prices

Crude oil prices closed out their biggest week of losses in more than nine months with another down day on Friday, as investors sold futures in anticipation of weakened fuel demand worldwide due to a surge in COVID-19 cases, said a Reuters report.

The crude market has now posted seven consecutive days of losses. Numerous nations worldwide are responding to the rising infection rate due to the coronavirus Delta variant by adding travel restrictions to cut off the spread.

Brent crude fell 8 percent on the week, settling down $1.27, or 1.9 percent, to $65.18 a barrel, its lowest since April and down about 8 percent for the week. US West Texas Intermediate (WTI) crude for September settled down $1.37, or 2.2 percent, to $62.32 a barrel on Friday, to lose more than 9 percent for the week.

Global Cues

United States:

Markit Manufacturing, Services & Composite PMI Flash for August; Existing Home Sales for July on Monday, August 23.

New Home Sales for July on Tuesday, August 24.

MBA Mortgage Applications for the week ended August 20; Durable Goods Orders for July on Wednesday, August 25.

Initial Jobless Claims for the week ended August 21; Q2CY21 GDP second estimates on Thursday, August 26.

Personal Income & Spending for July on Friday, August 27.

European Region

Markit Manufacturing, Services & Composite PMI Flash for August on Monday, August 23.

ECB Monetary Policy Meeting Accounts on Thursday, August 26.

Japan

Jibun Bank Manufacturing, Services & Composite PMI Flash for August on Monday, August 23.

Corporate Action

(Edited by : Aditi Gautam)

First Published:Aug 22, 2021 3:33 PM IST