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Market Week Ahead: 10 factors to keep investors busy

Yatheendradas C.k. at 05:17 AM - Jul 24, 2017 ( ) Views: 282

Market Week Ahead: 10 factors to keep investors busy amid July F&O expiry

Experts expect the consolidation to continue in the coming week as July derivative contracts will expire on Thursday and traders will roll over their F&O positions to August series. They expect the expiry around 9,850-9,920 levels.

Jul 23, 2017 09:49 AM IST | Source: Moneycontrol.com   Sunil Shankar Matkar


The market closed flat with a positive bias in the passing week as the rally in Reliance Industries (post solid Q1 earnings, bonus issue of 1:1 and new Jio strategy) and technology stocks (after Wipro's buyback worth Rs 11,000 crore) offset the initial fall due to ITC that cracked 13 percent on a hike in cigarette cess.

Strong progress in monsoon also led major support to the market in the week gone by. The 50-share NSE Nifty gained 0.29 percent at 9,915.25 and the 30-share BSE Sensex was up 0.03 percent at 32,028.89, continuing the upside for third consecutive week.

Experts expect the consolidation to continue in the coming week as July derivative contracts will expire on Thursday and traders will roll over their F&O positions to August series. They expect the expiry around 9,850-9,920 levels.


Earnings from big firms like Bharti Airtel, Maruti Suzuki, ICICI Bank, HDFC, HDFC Bank, Axis Bank, Yes Bank, Hero MotoCorp, Dr Reddy's Labs, Larsen & Toubro, HCL Technologies, ONGC etc and Federal Reserve's two-day meeting will be closely watched in the coming week.

Overall the market trend is expected to remain positive and the Nifty may make an attempt to move towards five digits mark as earnings, so far, have been stable and monsoon has progressed well, experts feel.

"So far the earning remained mix, however expectations of better earnings are very much on the card going ahead. Hence, we could say, indices are likely to dance to the tune of corporate results and behave accordingly," Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments said.

Vijay Singhania, Founder-Director of Trade Smart Online expects a fresh rally to trigger once the 9920-9930 zone is broken on closing basis, this would then open up the door for the 10,000 milestone. On the downside, 9840 is the crucial support zone, he said.

In the current consolidation, the underperforming sectors have started performing on the back of short covering. This pattern is likely to continue in the coming weeks, Amit Gupta of ICICIdirect feels.

Here are 10 factors that will keep investors busy next week:-


Apart from mid & smallcaps, more than 30 percent of Sensex companies are scheduled to release June quarter numbers in the third week of earnings season, which include majority of private banks.



Not only for ICICI Bank but for other banks also, the key point to watch out for would be asset quality because in earnings, which announced so far, all banks except Indian Bank reported an increase in non-performing assets.

According to Motilal Oswal, key issues to watch out for in ICICI Bank would be the movement of watch-list accounts; plans on monetisation of stakes in various ventures; and outlook on asset quality.

The research house feels gross slippages of the bank are expected to remain high in Q1FY18 (4.5 percent slippage ratio) and loan growth is expected to moderate to around 5 percent YoY (growth of 1.5 percent QoQ).

"Corporate loan growth would be moderate and international loan exposure would continue to decline. Retail loans should continue to exhibit healthy growth," it said.

Bharti Airtel & Idea Cellular

In the telecom space, all eyes are companies' revenues and margins which are expected to get a hit from Reliance Jio's paid plans as these telecom operators offered unlimited free voice, extra data package to high ARPU subscribers.

"We expect Bharti Airtel's voice revenues to witness de-growth of 1.5 percent QoQ to Rs 9,123.4 crore in the India mobility business. We expect data ARMB to slide 16 percent QoQ to 10.3 paisa and data revenues to decline 1 percent QoQ to Rs 2,720.7 crore," ICICIdirect said.

In case of Idea Cellular, the research house expects overall voice revenue to decline 2.8 percent QoQ and data tariffs to decline 10 percent QoQ to 9.8 paisa. "The negative operating leverage owing to both data and voice revenues decline may impact margins coupled with higher network costs," it said.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

Larsen & Toubro

Order inflow and any revision in guidance would be key factors to watch out for in the engineering and construction major.

With implementation of GST and a seasonally weak quarter, ICICIdirect expects L&T to report 4 percent YoY growth in overall revenues and infrastructure segment revenues to grow 12 percent on the back of strong execution in international markets.

However, power segment is expected to witness decline of 54 percent YoY in revenues due to lower backlog, the research house said.

Monsoon Session of Parliament

Monsoon session of Parliament, which started on July 17, has been going through a rough patch with continuous adjournments due to walk outs and protests.

In the current monsoon session, 21 bills are pending for approval in Lok Sabha and 42 bills in Rajya Sabha, many of which would be considered for passing during the session.

Some of these are the Financial Resolution and Deposit Insurance (FRDI) Bill, The Banking Regulation (Amendment) Bill, The Central Goods and Services Tax (Extension to Jammu and Kashmir) Bill, The Consumer Protection Bill, The Companies (Amendment) Bill etc.

Technical Outlook

"Weekly chart shows a bullish hammer; it is candle generally indicating reversal in trend or momentum to pick up in coming sessions. It displays a wider lower shadow indicating buying interest at lower levels/ or an end to intermediate trend, while a body that is having close off the day generally near to high of day indicating the strength in trend as well," Mustafa Nadeem, CEO, Epic Research said.

He feels resistance in near term is at 9930 which is likely to be taken out earlier next week, which incase may attract buying for next resistance at 10040 while support comes at 9870-9840.

Nagaraj Shetti of HDFC securities also feels a decisive up move only above 9950 could take Nifty to the historical 10k mark.

"The detailed study of the momentum oscillators with overall chart set up is hinting at a possibility of a formation of an important top reversal in Nifty from the new highs in the next 2-3 weeks. Meanwhile, a decisive move above 9950 levels could open up the next upside target of around 10200 levels for Nifty, which could be achieved in the next 1-2 weeks," he said.


Maximum Call open interest (OI), of 67.84 lakh contracts, stands at strike price 10,000, which will act as a crucial resistance level for the index in the July series, followed by 9,900, which now holds 47.01 lakh contracts in open interest, and 10,100, which has accumulated 31.03 lakh contracts in OI.

Maximum Put OI of 64.63 lakh contracts was seen at strike price 9,800 which will act as a crucial base for the index in July series, followed by 9,500, which has accumulated 48.4 lakh contracts in open interest, and 9,700, which now holds 47.02 lakh contracts in open interest.

"The 10,000 Call strike now as are moving to the settlement has seen addition and it is holding more than 67 lakh shares. We believe Nifty positive move should continue and the declines towards 9,800 should be utilised to buy in the coming week also," Amit Gupta said.

Corporate Action

Sunteck Realty will trade ex-split (from Rs 2 to Re 1) from July 25 and Sai Baba Investment will also started trading ex-split (from Rs 10 to Re 1) from July 27.

Following companies will adjust for dividends in the coming week.


Stocks in Focus

On Monday, Tata Sponge, Quess Corp, Persistent Systems, MRPL, Amtek Auto, Avenue Supermarts, IIFL Holdings, J&K Bank, SREI Infra, Vijaya Bank and Divis Labs will react to their June quarter numbers that announced on Friday (after market hours) and Saturday.

Following stocks will also react to news on Monday:-

Amtek Auto has entered into an arrangement to sell its UK subsidiaries' plants to Liberty Group.

Dishman Pharma said Dishman Carbogen Amcis has received in-principle nod for listing of 16 crore shares of Rs 2 each. US FDA concluded inspection of Lupin's Goa facility with zero observations.

AstraZeneca Pharma said it would launch Osimertinib 40 mg & 80 mg on July 27, 2017, which an oral anti-cancer drug for management of lung cancer.

Apex Buildsys won a contract from Alstom India for Rs 7.5 crore.

Federal Reserve Meet and Other Global Cues

Global markets will keenly watch the meeting of US Federal Reserve on July 25 and July 26, for any surprises and further rate hike. In June meeting, the Federal Reserve raised the target range for its federal funds rate by 25 basis points to 1 percent to 1.25 percent.

The general consensus is that the Federal Reserve may keep interest rates unchanged.

On Monday, Japan, US and Europe's Manufacturing PMI data will be released while Europe and US' Services PMI will also be unveiled.

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