Key developments that will drive the markets this week

Let us look at all important news that could impact market sentiment in the week ahead.

Feb 22, 2021 07:02 IST India Infoline News Service

The post Budget rally fizzled out last week with Sensex losing 1,265 points in four sessions. The index, which closed at all-time high of 52,154 on February 15, closed at 50,889 on Friday. Nifty too has lost 333 points since Monday after the index closed at 14,981on Friday. Let us look at the events that may drive the market in the week ahead.



FIIs

Foreign institutional investors (FIIs) maintained their buying spree of Indian market, investing Rs24,965cr so far in February amid optimism about the COVID-19 vaccine and faster-than-expected economic recovery. The Union Budget proposals also boosted investors' sentiment. As per depositories' data, foreign portfolio investment (FPIs) pumped in Rs24,204cr into Indian equities and Rs761cr in the debt segment, taking the total net investment to Rs 24,965 crore during February 1-19. Last month, FPIs made net investment of Rs14,649cr.

IPO

The IPO of Heranba Industries, a Gujarat-based agrochemical company, will open on February 23 and the company has fixed a price band of Rs626-627 per share. The issue closes on February 25. The lot size in Heranba IPO has been fixed at 23. At the upper price band of Rs627, one lot will cost Rs14,421 and retail investors can apply a maximum of 13 lots. Heranba is offering up to 99.8 lakh shares in the IPO, with 90.2 lakh shares under offer for sale and the rest through fresh issue of shares.

Heranba is one of the leading manufacturers of synthetic pyrethroids in India. It manufactures intermediates, technicals and formulations and also exports to more than 60 countries. The company has three manufacturing plants and has over 9,400 dealers.

New listing

RailTel Corporation, the second state owned company after IRFC opened to public, was subscribed 42.4 times during February 16-18, 2020. The Rs819cr initial public offer was a complete offer for sale by the government and a part of the divestment programme set for FY21. The shares will start trading on the bourses with effect from February 26.

Nureca, a B2C company engaged in the business of home healthcare and wellness products, is likely to commence trading in equity shares on February 26. The public issue opened for subscription on February 15. The company will utilize issue proceeds for its incremental working capital requirements.

Government bond auction

Last week, the Reserve Bank of India (RBI) partially devolved the government bond auction upon primary dealers for the second time in as many weeks. The devolvement of an auction generally signifies that the central bank is not willing to accept bids at yields higher than what it is comfortable with. Bond traders believe that 10-year benchmark bond yields should be much higher than where it is, given rising inflation concerns and growth expectations, but the central bank appears adamant to pin yields at 6%. This week, the monetary authority is set to conduct the operation switch, which will be keenly watched by investors.

GDP data

The GDP data from the last quarter is set to be released on Friday. The economy is expected to record positive growth for the October-December quarter after the 7% contraction in the previous quarter. As per the recent projection by ICRA, India's GDP is expected to record a year-on-year rise of 0.7% in Q3FY21. Hit by the COVID-19 pandemic and the nationwide lockdown imposed by the government in late March last year to control the spread of infections, India's GDP contracted by 23.9% in April-June and 7.5% in July-September quarter.

US Stocks
 
Wall Street’s main indexes closed flat on Friday as investors sold technology shares that have rallied through the pandemic and rotated into cyclical stocks set to benefit from pent-up demand once the coronavirus pandemic is subdued. The Dow Jones Industrial Average was up 0.98 point to end at 31,494.32. The S&P 500 index fell 7.26 points, or 0.2%, to 3,906.71. The Nasdaq Composite Index picked up 9.11 points, or 0.1%, to 13,874.46
 
Weakness in the labor market and worries about rising bond yields have put pressure on the broader equities market, especially after a surprise increase in the number of Americans seeking jobless benefits in the latest week weighed on the outlook.   Market participants have been expecting further government spending to help avert the possibility of a relapse of weakness from the COVID pandemic, with ongoing negotiations in Congress on the Biden administration’s $1.9 trillion aid package.

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