Dalal Street Week Ahead: 10 highlights that will keep traders busy next week

Dalal Street Week Ahead: 10 highlights that will keep traders busy next week

Despite the volatility, benchmark indices continued their run for the fifth week in a row, with better-than-expected Infosys and Wipro quarterly earnings, positive global forecasts, and progress on the COVID-19 vaccine development. However, increasing coronavirus cases and the influx of FIIs and DIIs outweighed the benefits.

The BSE Sensex was up 1.16 percent and the Nifty 50 was up 1.24 percent. Meanwhile, broader markets were inactive last week as the Nifty midcap and smallcap indices fell slightly.

The BSE Sensex was up 1.16 percent and the Nifty 50 was up 1.24 percent. Meanwhile, broader markets were inactive last week as the Nifty midcap and smallcap indices fell slightly.

“Widespread in the market, profit-booking, especially for traders, is expected to return from March low to 45 percent return in less than four months. Investors are advised to be cautious and be stock & sector-specific in such a vulnerability,” said Vinod Nair, head of research at Geojit Financial Services.

HDFC Bank announced on Monday, July 18 that the market will first respond to its June quarter earnings.

Here are 10 key factors that will keep traders busy next week:

Earnings:

More than 260 corporates will release their quarterly figures in the coming week, including March and June quarter earnings. Keep in mind that the March quarter earnings season ends on July 31st due to the lockdown.

Key corporate earnings scorecard to watch out for would be ICICI Bank, Axis Bank, Bajaj Finance, Hindustan Unilever, ITC, Bajaj Finserv, Bajaj Auto, ACC, Larsen & Toubro, Ambuja Cements, Asian Paints, HDFC Life, ICICI Prudential Life Insurance Company, SBI Life, HDFC AMC, SBI Card and JSW Steel.

Bombay Dyeing, Zee Entertainment, Hindustan Zinc, IndiaMART InterMESH, Syngene International, Tata Elxsi, Alembic Pharma, Heidelbergcement India, ICICI Securities, Jindal Steel & Power, ABB India, AU Small Finance Bank, Biocon, Mphasis, PNB Housing Finance, MCX, Persistent Systems, TV18 Broadcast, Network18Media & Investments also announce quarterly earnings.

ICICI Bank, Axis Bank

ICICI Bank and Axis Bank will announce their June quarter earnings next week. In fact, looking at the table above, it turns out that BFSI is high during the week. NBFC major Bajaj Finance will also release its quarterly figures next week.

According to brokerages, ICICI Bank Q1FY21 profit and pre-provision operating profit (PPOP) YoY are likely to grow by more than 50 percent due to the sale of shares in the life and general insurance business, while net interest income is likely to rise. 7-12 percent debt growth and 14-17 percent YOY range behind sustainable NIM. Property quality is also expected to remain stable, but regulations will increase due to COVID-19.

Axis Bank Q1FY21 reported a decline in profit, which lags behind most terms compared to last year, but may turn a profit compared to losses with lower terms QQ in the March quarter. The NII is expected to remain strong at 14-16 percent higher YOY with strong credit growth supported by sustainable NIM and retail segments. Property quality is expected to improve and slips in Q1 are likely to fall on a consecutive basis.

Private Insurance Companies:

All private life insurance companies – HDFC Life Insurance Company, ICICI Prudential Life Insurance Company, and SBI Life Insurance Company will announce their June 21 quarterly earnings on the same day, July 21.

According to brokerages, by unlocking the economy and giving emerging trends on a monthly basis, the insurance sector is likely to boost growth somewhat. (VNB Margin) on a consecutive basis in the June quarter, but along with the annual premium equivalent (APE), QoQ YoY also declined sharply.

“Overall we expect APE of listed players to de-grow at 25-40 percent, while margins to remain steady QoQ as protection mix rises despite a crash in volumes,” Prabhudas Lilladher said.

“Although companies are now familiarizing themselves with the new normal, traction in retail APE still remains fairly weak. However, group insurance traction has seen a surge for SBI Life while HDFC Life and ICICI Prudential Life continued to struggle on this front,” Emkay said.

Coronavirus:

The country has seen a steady increase in COVID-19 cases, with 30,000 cases being reported every day over the past 4 days.

There have been more than 10,38,716 cases reported in India so far, including 26,273 deaths. Maharashtra, Tamil Nadu, Delhi, Delhi, and Gujarat recorded the highest number of cases. India’s recovery rate is 62.94 percent.

Worldwide, more than 1.42 million COVID-19 cases have been diagnosed. More than 6 lakh have died so far.

Vaccine Hope:

Progress in vaccine development for COVID-19 is a major reason behind the rally in global equity markets.

In India, clinical trials began this week between Bharat Biotech International, which developed Kovacin, and Zydus Cadila, which named its vaccine Zykov-D. Worldwide, more than 140 vaccines are in the race as Sinovac from China enters the 3rd phase of trials in Brazil. And the University of Oxford / AstraZeneca recently entered the 3rd phase of trials in South Africa and Brazil.

Rossari Biotech Listing:

Following the stellar response to the Rs 496 crore IPO, next week’s focus will be on the list of specialty chemical maker Rosary Biotech. While the probable listing date is July 23, the allocation basis maybe July 20.

It would be the first listing during the lockdown and second after SBI Card in 2020.

The new issue, which has an offer of Rs 50 crore and promoters to sell 1.05 crore shares, received 79.37 times the huge subscription with the support of QIB and non-institutional investors.

Technical View:

The Nifty 50 closed above 10,900 levels last week, the highest since March 6, and showed a good comeback after hitting a weekly low of 10,562.90, but the week remained very volatile.

After crossing the 1.5 percent rally and 200 DMA (10,870) on Friday, the index witnessed the formation of a bullish candle on a daily basis, but with a gain of 1.2 percent per week, it set a hanging man-like pattern on the weekly charts. Indicated a sign of fatigue and is usually a bearish reversal candlestick pattern, which usually occurs at the end or top of the uptrend.

“The formation of the Hanging Man candlestick pattern, on a weekly scale, is considered a bear reversal pattern, however, we need the same confirmation that it will come if the Nifty breaks the 10,560 low,” said Nilesh Jain of Anand Rati.

“Now, as long as Nifty trades above 10,560 levels, we can expect the ongoing rally to continue towards 11,200 levels,” he said.

F&O Cues:

Weekly Options data indicates that a huge amount of put writing appeared during the 10,700 and 10,800 strikes on Friday. The maximum public interest towards the putt has shifted to 10,700 strikes. And is likely to serve as a major support in the coming week as well.

A huge amount of call writing was seen at 11,200 strikes, which had maximum public interest, followed by 11,000 strikes. So the overall option data indicates that the bulls have the upper hand. And the Nifty could trade in the wide range of 10,700 – 11,200 in the coming week.

“The index is likely to test 11,000, 11,200 levels in coming weeks with support seen at 10,750. The highest Call base is almost equally placed at 11,000 and 11,200 strikes. Thus, a move above 11,000 would lead to another leg of short-covering towards 11,200,” said Amit Gupta of ICICI Direct.

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