Commenting on the current Nifty trends, Rupak De, Senior Technical Analyst at LKP Securities said Nifty was trading below 50EMA, indicating short-term weakness. The index has fallen since forming a double top of around 26,100 on an hourly basis, he added.”Recently, the index has fallen below a critical moving average, setting a deeper bearish tone. The crucial resistance is at 25,600; as long as it remains below this level, sentiment may continue to favor a sell-on-rise strategy. On the downside, support is placed at 25,400, and a decline below this level could further boost bear morale,” De said.
Factors likely to influence the move when markets reopen this week:
1. Profit for the second quarter
The earnings season moves into its final stages this week with over 2,500 BSE-listed companies announcing their results. The Nifty pack includes Bajaj Finance, Bajaj Finserv, Tata Steel and Eicher Motors. The non-Nifty companies that are widely followed include Vodafone Idea, Fortis Healthcare, Hero MotoCorp, Reliance Infrastructure, Rail Vikas Nigam (RVNL), Tata Power Company, Cochin Shipyard, Honasa Consumer (mamaearth), Indian Railway Catering and Tourism Corporation, Nazara Technologies, SpiceJet, Brainbees Solutions (Firstcry) and Asian Paints.
2. US markets
The Nasdaq ended slightly lower on Friday, recording its biggest weekly percentage decline since early April, as fears over the sustainability of the AI-led rally weighed on Wall Street.
The Nasdaq Composite closed at 23,004.50, down 49.46 points (0.22%). Meanwhile, the Dow 30 closed the session at 46,987.10, up 74.80 points, or 0.16%, while the S&P 500 settled at 6,728.80, up 8.48 points, or 0.13%.
Domestic and global markets are likely to take their cues from US markets.
3. IPO monitoring
The fireworks in the primary markets will also continue this week with four motherboard issues hitting the streets viz. PhysicsWallah IPO, Tenneco Clean Air India IPO, Emmvee Photovoltaic Power IPO and Fujiyama Power Systems IPO. Meanwhile, bidding for Pine Labs will conclude on Tuesday.
In the SME segment, public numbers of Workmates Core2Cloud Solution and Mahamaya Lifesciences are launched. The current issues of Finbud Financial Services, Shining Tools and Curis Lifesciences will also close this week.
Shares of Lenskart Solutions will be listed on Monday, while those of Billionbrains Garage Ventures IPO (Groww IPO) are likely to make their debut on Wednesday, November 12.
4. Corporate action
There are plenty of major corporate actions planned this week, with more than 60 companies having record dates for interim dividends, bonus issues, buybacks, spin-offs and stock splits.
Infosys shares are expected to see action before the November 14 record date for share buyback. November 14 will also be the record date for the 1:10 stock split of Websol Energy System and the 1:1 bonus issue of SMC Global Securities.
Tuesday, November 11 will be the record date for interim dividends from Garden Reach Shipbuilders & Engineers (GRSE), Nuvama Wealth Management.
November 12 is the record date for the spin-off of Allcargo Logistics.
5. BE/DO action
Foreign Institutional Investors (FIIs) turned net buyers during the curtailed holiday season last week as they sold Indian equities to the tune of Rs 401 crore this week, thanks to Friday’s purchases of Rs 4,581.34 crore. Meanwhile, Domestic Institutional Investors (DIIs) were net buyers of Rs 6,674.77 crore.
Also read: FIIs are hot in AI, dumping Indian equities worth Rs 1.5 lakh crore so far by 2025. Can bubble fears reverse trends?
6. Technical factors
Decoding Nifty’s strength in charts, Nilesh Jain, Head – Technical and Derivatives Research Analyst at Centrum Broking said the index has made lower highs and lower lows since forming a double top near the 26,100 level.
“Currently, it is undergoing a retracement of the entire October series rally, with the 50% retracement level at 25,350 already tested. The next major support is near 25,160, which corresponds to the 61.8% golden retracement level. Momentum indicators and oscillators have turned negative on the daily chart with a sell-crossover, although they still remain in buy mode on the weekly chart,” said Jain. According to him, Nifty is nearing a crucial support zone, where a recovery can be expected, making it a ‘buy on dips’ trade as long as Nifty remains above 25,160. A decisive move above 25,700 would be a bullish confirmation for further gains towards 26,000, he added.
Also Read: Market Turnaround: Red Reigns on D-Street as 347 of the BSE 500 Stocks See a 12% WoW Decline. IT and energy scripts have been hit the hardest
7. Rupee vs Dollar
The Indian rupee fell on Friday but remained above record lows to end the week slightly higher as frequent interventions from the Reserve Bank of India supported the currency in the face of outflows and continued demand for dollars from importers. The rate settled at 88.66 against the US dollar, lower than the closing rate of 88.6125 during the previous session. However, this week the currency rose by 0.1%.
Portfolio outflows due to heavy selling in equities coupled with a generally firmer dollar weighed on the rupee on Friday, as traders marked dollar selling by state-owned banks at around 88.70, helping limit the currency’s fall.
Ongoing uncertainty over US-India trade talks is likely to keep pressure on the rupee, Goldman Sachs analysts said in a note. “Even as trade uncertainty subsides, we believe the RBI will replenish its forex reserves on dips in USD/INR,” the note said.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of Economic Times)
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