Ahead on D-Street: Reliance AGM, macro data, global cues & more; check key triggers for stock markets this week

Markets consolidated in a range and settled lower for the fifth successive week -the longest streak since April 2022 – mainly pressurized by weak global cues. The tone was positive for most of the week but a decline in the final sessions pushed the index in the red. 

On the benchmark front, Sensex closed with a loss of 366 points, or 0.56 per cent, at 64,886.51 while the Nifty50 closed the day at 19,265.80, down 121 points, or 0.62 per cent.

For the week, Sensex slipped by 0.10 per cent while the Nifty declined by 0.23 per cent. On the other hand, the BSE Midcap index rose 1.50 per cent while the Smallcap index jumped 2.19 per cent for the week.

The market was influenced by a combination of factors including escalating the US bond yields, concerns stemming from China, and the downward pressure exerted by heavyweights such as Reliance Industries and HDFC Bank.

A mixed trend on the sectoral front kept the traders busy wherein banking, financials and IT pack witnessed recovery while energy and pharma lost over a per cent each. Amid all, the buoyancy in the midcap and smallcap basket eased some pressure, according to analysts.

‘’Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause. Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid- and small-cap stocks demonstrated resilience and gained momentum,” said Vinod Nair, Head of Research at Geojit Financial services.

Going forward, a buzzing week awaits the primary market with four new public issues to be rolled out for bidding, along with six listings across mainboard and SME segments. Markets will begin the week by reacting to Reliance Industries’ 46th AGM on Monday, August 28.

The week will also be crucial with regards to macroeconomic landscape as the government will release data on important economic indicators. This, along with global cues, will drive market dynamics in the next few days. 

Here are the key triggers for stock markets in the coming week:

Reliance AGM:

The upcoming week’s focal point is the eagerly awaited Reliance 46th AGM. The event is poised to have some impact on the market’s trajectory, say analysts, as expectations are high that the Mukesh Ambani-led conglomerate may unveil a series of significant announcements. Some information with regards to the fundamentals of Jio Financial Services Ltd is also expected in the upcoming AGM.

‘’These revelations may encompass updates on IPO timelines for their telecommunications and retail businesses, insights into the progress of the 5G rollout, and revelations about investments in clean energy initiatives,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Last week, D-Street bulls preferred to wait until Monday for the big AGM which could be of interest to investors, according to market analysts.

Macro Data

India is set to reveal the gross domestic product (GDP) data of the April-June quarter (Q1) of current fiscal 2023-24 on Thursday, August 31. Concurrently, the manufacturing Purchasing Managers’ Index (PMI) data, as well as the fiscal deficit and infrastructure sector output, both for the month of July, will also be disclosed in the coming week.

Last week, the Reserve Bank of India (RBI) released the minutes of the Monetary Policy Committee (MPC) meeting on Thursday, highlighting that India’s headline inflation is likely to witness a spike in the near months on account of supply disruptions due to adverse weather conditions. 

There are risks from the impact of the skewed south-west monsoon so far, a possible El Niño event and upward pressures on global food prices due to geopolitical hostilities, according to the rate-setting panel.

4 IPOs, 6 listings to hit D-Street

In the coming week, four initial public offerings (IPO) await the bourses among main board and small-and-medium enterprises (SME) segment. These are as follows:

Rishabh Instruments IPO: The mainboard IPO will open for subscription on Wednesday, August 30 and close on Friday, September 1.

Mono Pharmacare IPO: The SME IPO will will open for subscription on Monday, August 28 and close on Wednesday, August 30.

CPS Shapers IPO: The SME IPO will will open for subscription on Tuesday, August 29 and close on Thursday, August 31.

Basilic Fly Studio IPO: The SME IPO will will open for subscription on Friday, September 1 and close on Tuesday, September 5.

New Listings in the coming week:
-Pyramid Technoplast shares get listed on stock exchanges BSE and NSE on Wednesday, August 30.
-Shoora Designs shares will get listed on BSE SME on Tuesday, August 29.
-Aeroflex Industries shares will get listed on stock exchanges BSE and NSE on Thursday, August 31.
-Crop Life Science shares will get listed on NSE SME on Wednesday, August 30.
-Bondada Engineering shares will get listed on BSE SME on Wednesday, August 30.
-Sungarner Energies shares will get listed on NSE SME on Thursday, August 31.

FII Inflow:

Foreign institutional investors (FIIs) continued their selling streak on D-Street last week on stronger US dollar and rising bond yields. The domestic institutional investors (DIIs) were net buyers again and invested ₹1,414 crore during Friday’s session.

As per the NSE data, FIIs cumulatively bought ₹10,929.61 crore of Indian equities, while they sold ₹15,567.82 crore — resulting in an outflow of ₹4,638.21 crore. Meanwhile, DIIs infused ₹8,542.44 crore and offloaded ₹7,128.09 crore, registering an inflow of ₹1,414.35 crore.

The performance of foreign portfolio investors (FPIs) also remains muted on D-Street so far in August after sustained buying in the last three months. FPIs bought ₹10,690 crore worth of Indian equities and infused a total of ₹14,766 crore as of August 26, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL ) data.

In the cash market, FPIs sold Indian stocks worth ₹15,817 crore so far this month. Strength in the US dollar index at well around 104 and the US 10-year bond yield remaining around 4.25 per cent are short-term negatives for FPI flows to emerging markets like India.

‘’In the realm of derivatives, FIIs have positioned themselves with a 40 per cent long exposure in index futures. The put-call ratio of 0.83 points towards an oversold scenario,” said Swastika Investmarts’ Santosh Meena.

Global Cues:

Markets are likely to react to the comments by Fed Chair Powell at the Jackson Hole symposium, which came after (Indian) market hours on Friday. The US Federal Reserve is prepared to raise interest rates higher, and hold them there, in order to bring down elevated inflation in the world’s largest economy, chairman Jerome Powell said at the Jackson Hole central banking conference in Wyoming.

Going forward, some macroeconomic key events that will drive the market in the coming week are US Q2 GDP data, US unemployment rate, US manufacturing PMI, US initial jobless claims. China Manufacturing PMI August, along with Japan’s, Eurozone’s and UK Manufacturing PMI August will also be released in the coming week.

These global indicators, in conjunction with cues from China, foreign investor activities, and fluctuations in the dollar index and US bond yields, will play a pivotal role in shaping market dynamics throughout the week, according to analysts.

‘’The performance of the global markets will continue to provide cues. Among the major indices, we are seeing a possibility of a rebound in the US markets but it would be critical to hold the 33,700-34,200 zone in the Dow Jones Industrial Average (DJIA) for any meaningful recovery,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Oil Prices:

In the previous session, oil futures climbed about 1 per cent to a one-week high as US diesel prices soared, the number of oil rigs dropped and a fire broke out at a refinery in Louisiana, according to news agency Reuters.

Brent futures rose $1.12, or 1.3 per cent, to settle at $84.48 a barrel, while US West Texas Intermediate (WTI) crude rose 78 cents, or 1 per cent, to settle at $79.83. Diesel futures soared about 5 per cent to a near seven-month high, boosting the diesel crack spread , a measure of refining profit margins, to its highest since January 2023. 

Saudi Arabia will likely roll over the voluntary oil cut of 1 million barrels per day (bpd) for a third consecutive month into October amid uncertainty about supplies and as the kingdom targets pulling down global inventories further, according to analysts quoted in a report by Reuters.

Weak economic data and a stronger US dollar limited gains. For the week, Brent declined less than 1 per cent and WTI lost about 2 per cent. Last week, both benchmarks fell about 2 per cent.

Corporate Action:

Shares of several companies including Shipping Corporation of India, NMDC, Birla Corporation, Metro Brands, among many others will trade ex-dividend in the coming week, starting from Monday, August 28. Check full list here

Additionally, shares of Indo Us Bio-Tech Ltd, G N A Axles, will trade ex-bonus on August 29 and September 1, respectively. Remedium Lifecare Ltd will declare a stock split from ₹10 to ₹5 on September 1.

Technical View:

Nifty prices fell for the fifth consecutive week, resulting in a reduction of approximately 4 per cent from their peak value. From a technical standpoint, the Nifty index has slipped beneath its 20-day and 50-day moving averages (DMAs), signaling a short-term bearish bias. Key support levels to monitor are 19,191 and 18,888, according to analysts.

‘’The sentiment is expected to stay bearish as long as the index remains below 19,450, where the 21-day Exponential Moving Average (EMA) is positioned on the daily timeframe. If the index decisively falls below 19,240, it could potentially lead the Nifty towards the 19,000 mark,” said Rupak De, Senior Technical Analyst at LKP Securities.

Prices are currently trading near a 10-week EMA, which had been acting as a crucial support for a long. Arvinder Singh Nanda, Senior Vice President, of Master Capital Services also agrees on the outlook.

‘’A decisive breach below the 19,200 mark would signal a continuation of this downward trend, potentially driving prices towards the range of 19,000-18,900, aligning closely with the vicinity of the 21-week EMA,” said Nanda.

‘’On the upside, the 19,400–19,500 range emerges as a critical resistance zone, the breach of which could pave the way for positive momentum,” said Swastika Investmarts’ Santosh Meena.

In case of any attempt to rebound, the 19,500- 19,650 zone would continue to act as a hurdle, according to analysts. Some also expect the index to continue to be in a narrow range due to lack of positive triggers.

‘’Among the key indices, we expect banking, financials and IT to show further resilience while pharma and energy may continue to attract selling. Amid all, participants should continue stock-specific trading approach and maintain positions on both sides,” said Religare Brokings’ Ajit Mishra.

The Bank Nifty index witnessed an ongoing struggle between bulls and bears, resulting in a phase of range-bound trading. Prices are forming a higher bottom formation on the weekly chart. The support level is clearly visible around 44,000, near 21-week EMA, coinciding with significant put writing, which could act as a stronghold against downward movements, observed market analysts. 

‘’Conversely, resistance can be observed around 45,000, where the highest open interest is seen on the call side, indicating potential selling pressure. A decisive break on either side of this range could trigger trending moves. Despite this, the prevailing bias appears to lean towards the bullish side within the range,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 27 Aug 2023, 06:33 AM IST