Dalal Street Week Ahead | Powell Speech, FII Swings to Navigate Futures Next Week, Last Leg of Earnings Season

 Dalal Street Week Ahead | Powell Speech, FII Swings to Navigate Futures Next Week, Last Leg of Earnings Season

It would be important to see if markets can maintain the bullish trend as India Inc. enters the last stretch of results season and the festive mood of Diwali grows.

On November 3, the broad-based Nifty gained 0.96 percent to settle at 19,230.60, while the Sensex gained 0.91 percent to conclude at 64,363.78, respectively.

By the end of the week, the markets had recovered from their initial cautiousness, riding high on the Federal Reserve's dovish stance in maintaining the US policy rates.

Finally emerging from a two-week depression, the Indian benchmark pair finished one percent higher on November 3. This was made possible by a decline in US bond rates and a softening of crude oil prices. The world markets responded instantly when US monetary authorities decided to keep the key interest rates at 5.25–5.50 percent for the second time in a row.

On November 3, the broad-based Nifty gained 0.96 percent to settle at 19,230.60, while the Sensex gained 0.91 percent to conclude at 64,363.78, respectively.

The yield on US 10-year bonds began to decrease after reaching a top of 5 percent on October 19. The following two days saw a particularly rapid decline, which brought the yield down to 4.66 percent on November 3.

Moreover, broader indexes did better than benchmarks and were upbeat. The largecap index increased by 1.2 percent, while the BSE midcap and smallcap indexes gained 2 percent. Real estate (up 10.3%) and media (up 4%), among other industries, were the biggest gainers, while the car industry (down 0.7%) finished down.

It will be important to see whether markets can maintain this pace as India Inc. enters the last stretch of results season and the festive mood of Diwali grows. Let's examine the variables that traders should be aware of for the week starting on November 6.

Q2 revenue

Between November 6 and 12, more than 2,400 listed businesses are scheduled to release their Q2 results. ONGC, Divis Laboratories, Power Grid Corporation, Adani Ports, Coal India, Eicher Motors, Hindalco Industries, Mahindra & Mahindra, as well as Power Grid Corporation are among the notable companies in the Nifty50 that have not yet disclosed their results.

Next week, there will be the release of earnings scorecards from a number of companies, including Tata Power, Life Insurance Corporation, Nykaa, Lupin, Aurobindo Pharma, Bosch, Shree Cement, Zee Entertainment Enterprises, Biocon, Bharat Forge, Emami, Gland Pharma, Sobha, Varun Beverages, Alkem Laboratories, Alembic Pharma, Apollo Tyres, Cummins India, Ideaforge Technology, IRCTC, Zaggle Prepaid Ocean Services, Zydus Lifesciences, Bata India, Nazara Technologies, Oil India, Power Finance Corporation, Samhi Hotels, United Spirits, ABB India, Ashok Leyland, Glenmark Pharma, and Hindustan Aeronautics.

Analysts feel that so far this quarter's results have been in line with predictions. While banks, which make up the majority of the Nifty50 index, reported great earnings with high margins and strong asset quality, the IT sector recorded disappointing results. A decrease in demand led to an underperformance in the consumer sector. Because of higher margins, auto industry businesses outperformed expectations, according to Master Capital Services Senior Vice President Arvinder Singh Nanda.

Fed lingo

Over the course of the next week, Fed representatives Cook, Barr, Jeffrey, Waller, Williams, and Barkin are scheduled to appear in several sessions. Investors will be closely observing Fed Chair Jerome Powell's talks at the Jacques Polak Annual Research Conference on November 24 as well as the Division of Research along with Statistics the centennial Conference on November 8.

Powell said, "I still believe, because my colleagues for much of the time still believe, that it is likely to be true," after the announcement that rates would remain steady. that in order to completely restore price stability, the labor market will need to weaken and see slower growth."

global economic information

The following important global economic data items should be noted:

Oil costs

On the last trading day of the week, oil prices dropped by more than 2 percent as worries over supply caused by tensions in the Middle East subsided. Both the Brent and WTI oil benchmarks finished the week down more than 6%.

Mohammed Imran, an economist at Sharekhan by BNP Paribas, predicts that crude oil prices would decline over the next several days, with WTI December expected to trade around the $80-$85 zone.

FII streams

Early in November, the FII selling tendency that was seen in September and October persisted. FIIs sold shares for Rs 3,063 crores in the cash market in the first three days of November.

According to Dr. V K Vijayakumar, Chief Management Strategist at Geojit Financial Services, the primary catalyst for FII selling—rising bond yields—has reversed, making it unlikely that this selling trend would continue in the future.

"The Fed Chair Jerome Powell's somewhat dovish remarks that inflationary expectations are still well-anchored even in the face of high inflation are the primary cause of this reversal in bond rates. He stated, "The market has taken this comment to mean that the rate-hiking cycle is coming to an end.

Data on Domestic Economy

On November 10, the figures for September's industrial and manufacturing output will be revealed. That same day, in the evening, the foreign currency reserves for the week ending November 3 will also be made public.

Industrial production increased by 10.3 percent in August, the highest level in 14 months, compared to a revised 5.7 percent rise in July. Foreign exchange reserves increased by $2.58 billion from the previous week to $586.11 billion for the week ending October 27.

technical perspective

Technically, the Nifty has seen a significant bounce, especially from the 200-Day Exponential Moving Average (DEMA). Experts cautioned that there are difficulties with the resistance levels at 19,330, 19,440, and 19,550.

"Once the Nifty closes above 19,550, the correction is expected to end; as long as it remains above 19,060, the outlook is bullish." The 200-day DEMA, which is now at 18,650, might be approached if the Nifty falls below this level, according to Santosh Meena, Head of Research at Swastika Investmart.

F&O Signals

According to the weekly options data, it is important to keep an eye out for bullish and bearish activity near 19,200 on the lower side and 19,300 on the upper side.

With regard to options, the highest call open interest was at 19,300 strike, followed by 19,500 and 19,400 strikes, and call writing at 19,300, 19,400, and 19,500 strikes. The highest put open interest was at 19,200 strike, followed by 19,000 strike, and put writing at 19,200 and 19,300 strike.

"Strong Call transaction at 19,300 Strike and an equally stronger Put transaction at 19,200 strike was seen in Nifty derivatives because of which the index behaved in a tight range.," SAMCO Securities' derivatives and technical analyst, Ashwin Ramani, said.

"The maximum Call interest that is open strike is placed at 19,300 Strike, therefore the option activity at this strike will ultimately determine the fate of Nifty’s motion in the upcoming week," he said.

Bulls were also benefiting from the trend's lowering volatility. The India VIX, which gauges the Nifty50's anticipated volatility over the next thirty days, finished at 10.88, down 0.21 percent for the week, staying within the range of the prior week.

main marketplace

The primary market will continue to see brisk activity. We anticipate listing Cello World in the beginning of the week. On November 6, shares may list on exchanges at a premium of 22–25 percent. The Protean eGov Technologies IPO will begin accepting subscriptions on the same day. Along with the closing of the ESAF Small Finance Bank IPO and the launch of the ASK Automotive IPO for subscription, Honasa Consumer may list on exchanges on November 7.

Investors in the SME area should pay particular attention to the initial public offerings (IPOs) of Sunrest Lifescience, KK Shah Hospitals, Baba Food Processing, Micropro Software, and ROX Hi-Tech.

Company behavior