Selling pressure intensified in the middle of the week following disappointing India Inc earnings, strong outflows from foreign investors and weaker global cues. Banking and metals were among the top losers on the sectoral front.
“Initially, the bias was positive but disappointment on the earnings front combined with feeble global cues triggered a decline in the middle which deteriorated further in the final sessions,” said Ajit Mishra, VP Research, Religare Broking.
BSE Sensex settled below the 60,000 mark on Friday, whereas Nifty50, somehow, managed to hold 17,650 level. However, the broader market outperformed the benchmark indices despite heavy selling.
This week is a holiday-trimmed one and investors will have strong interest ahead of ‘Muhurat trading’ on the auspicious occasion of Diwali. However, the domestic market will react to various major events in the first week of November.
Here are the key factors that may steer the market going ahead:
US FOMC Meet
The US Federal Reserve Policy meet is scheduled to be held between November 2-3. The meeting, which will kick off on Tuesday, will be a key event hinting towards the expected bond tapering and its timing. Global investors would be keenly watching the commentary and catching up cues from the central bank, which may impact the risk sentiments.
Auto sale numbers
Domestic auto players will release data for October sales on November 1. The crisis of semiconductor chips and rising commodity prices are more likely to impact the sales of auto players. However, investors would be keenly watching for support from the festive season. The sector has remained a laggard for several months in the equity market.
The earning season for India Inc is likely to continue its momentum in the first week of November. Thus far, domestic companies have reported a mixed bag in terms of earnings, which has failed to boost the enthusiasm among traders.
In the upcoming week, several bluechips and investors favorite companies including HDFC, Tata Motors, IRCTC, State Bank of India, Relaxo Footwears, Bharti Airtel, Sun Pharma, Dabur India, Godrej Properties, Hindustan Petroleum, Jindal Steel & Power, Bata India and Pfizer will announce their Q2 results.
Stock bourses will conduct the customary one-hour special ‘Muhurat’ trading between 6.15 pm and 7.15 pm on Diwali, November 4, a time beyond normal trading hours but fixed as per the astrologically defined auspicious moments of the day.
This year’s session would mark the advent of Samvat 2078 — the Hindu calendar year that starts on Diwali. It is believed that ‘Muhurat’ trading brings prosperity and wealth throughout the year.
The sharp selling and heavy outflows from foreign investors has been the major reason behind the recent correction in the equity market. They booked profits at higher valuations, following the downgrade of Indian equities by global brokerage houses.
Foreign investors pulled out more than Rs 25,500 crore from the Indian equity market in October, keeping traders on their toes. Additional selling pressure from global investors may jitter sentiments in the market further.
The festive mood on Dalal Street will gather momentum this week with a super strong activity in the primary market. As many as three news issues – PB Fintech, Sigachi Industries and SJS Enterprises – will kick off between November 1 and November 3.
Also, a couple of ongoing issues – FSN E-commerce Ventures, the parent company of Nykaa, and Fino Payments Bank – will conclude on Monday and Tuesday, respectively. Despite lesser number of trading sessions, investors will have as many as five issues to subscribe.
The new variant of coronavirus is a concern across the globe as its latest mutation named, AY4.2, has been on the rise in the United Kingdom and other parts of globe. However, the new variant is a rare phenomenon in India thus far but a few cases in southern Indian states have been reported.
The market breadth remained mostly negative for the entire week with many sectoral indices, including Bank Nifty, facing selling pressure. Although, Nifty did bounce from minor support of 17,600 level in the last trading session, the sentiment currently seems bearish, said Yesha Shah, Head of Equity Research, Samco Securities.
“The next crucial support level is now placed at 17,250. A decisive break below this level can extend the price and time correction to a couple of days going ahead. As the market is currently standing at a critical level, traders should keep tight stop losses while taking any positions,” she added.