Key developments that will drive the markets this week

Let us look at the key developments this week.

Sep 20, 2021 07:09 IST India Infoline News Service

Bulls took the total control of Indian domestic markets to rise higher with each passing week. Improving CPI data, with the major announcement of PLI scheme by the government for auto, relief to the telecom sector and updates related to bad banks has boosted sentiments on the last week. Buying was witnessed across sectors which helped the benchmark to post decent gains. Consequently, Sensex and Nifty ended with gains of 1.2% each to close at 59,015 and 17,585 respectively.

Complying with global indices, India affixed another feather to its cap by surpassing France, for the first time, in terms of market capitalization to claim the world's sixth-largest stock market position. In only 15 days in September, Nifty50 rose over 3% in contrast to the world's major markets, like S&P 500 and Hang Seng which plunged nearly 1% and 4% respectively.

In absence of any major domestic event, domestic markets will take a fresh cue from their global counterparts. On the global front, we have the FOMC meeting scheduled next week and the outcome is scheduled for September 22. 

Let us look at the key developments this week.

Paras Defence IPO to open on Sep 21

Paras Defence and Space Technologies' IPO will open for subscription on September 21, and close on September 23. The price band for the offer has been fixed at Rs165-175 per equity share.

The offer comprises a fresh issue of Rs140.6cr and an offer for sale of up to 17,24,490 equity shares by Sharad Virji Shah, Munjal Sharad Shah, Ami Munjal Shah, Shilpa Amit Mahajan and Amit Navin Mahajan.

Sansera Engineering ahead of listing in this week

Sansera Engineering will make its debut on the bourses on September 24, 2021. The issue was subscribed 11.47 times during September 14-16 period with the portion reserved for qualified institutional buyers was subscribed 26.47 times.

The IPO was opened for public subscription on September 14 and close on September 16. The price band for the offer has been fixed at Rs734-744 per equity share.

FII & DII updates

According to the data, Foreign institutional investors (FII) net bought Indian equities worth Rs6,902.9cr ($938 million) in the week gone by. Domestic institutional investors, however, seem to have preferred to cash in the opportunity and net sold Rs2,896cr worth of shares during the week

Covid cases in India & Vaccination drive across India

According to the Union Health Ministry data updated on Sunday, India reported 30,773 new COVID-19 infections in the last 24 hours, 13.7% lower than Saturday, while active cases increased to 3,32,158. The active cases now comprise 0.99% of the total infections while the recovery rate has been recorded at 97.68%. As many as 38,945 recoveries were reported in the 24 hours that increased the total recovery figures to 3,26,71,167, the government data said.

Around 80.43 crore vaccine doses have been administered so far under the nationwide vaccination drive, of which 85,42,732 were administered in the last 24 hours.

Meantime, Tamil Nadu reports 1,697 new Covid-19 cases, 1,594 recoveries and 27 deaths in the last 24 hours.

Global cues back in action

US: In this week the policy decision by the US central bank, due on Wednesday. Fed Chair Jerome Powell's remarks will be watched closely to assess the course of tightening of its ultra-loose monetary policy and the timing of the withdrawal of massive stimulus. US consumer confidence flash data will also be released on Wednesday. Data on initial jobless claims and monthly home sales will be published the next day.

Europe: The European Central Bank will conduct its general council meeting on Thursday. The Bank of England will decide on key rates on the same day. PMI data on manufacturing and services will also be announced.

Japan: The Bank of Japan will announce its decision on key interest rates on Wednesday.

Technical view

Markets resumed a fresh leg of the up move, closing the week on the record highs.  The index Option gamma writers ran for a cover as the indices broke out from a narrow trading band. FIIs index futures long/short for the September trended hovered around 1.5x level, in the favour of the bulls. On the options front (September 30, 2021 expiry), the Nifty 17300PE strike price has witnessed fresh writing, hinting at a formation of a floor level for the index around the mentioned strikes in the coming days.

Gold & Silver outlook

MCX Gold price slipped below the consolidation low on the daily chart which is a bearish set-up for the near to short term. Besides, the price has fallen below 20EMA as well as 50EMA. Going forward, the price may find resistance around 46600. On the lower end, immediate support is visible at 45500, below which price may correct towards 45000.

MCX Silver fell below the previous swing low on the daily chart. In addition, price the 50EMA on the daily chart. Over the near term, the price may find resistance around 61500. A decisive move above 61500 may induce a rally towards 63000. On the lower end, the price may be correct towards the support of 58000.

India's forex reserves decline by $1.34 bn

According to the RBI data on the last week, India’s foreign exchange reserves declined by USD 1.34 billion to USD 641.113 billion in the week ended September 10, 2021. In the previous week ended September 3, the reserves had surged by USD 8.895 billion to a lifetime high of USD 642.453 billion. The country's reserve position with the IMF increased by USD 5 million to USD 5.127 billion in the reporting week, the central bank data showed.

Downfall again in S&P 500 index

The US Markets closed on Friday lower for the week amid a resurgent Covid virus, a Federal Reserve meeting next week and a historical tendency for September to be a weak month for equities.

The Dow Jones Industrial Average lost 166.44 points or 0.5% to close at 34,584.88, dragged down by a nearly 2.9% drop in Dow Inc. The S&P 500 shed 0.9% to 4,432.99 and the Nasdaq Composite lost 0.9% to close at 15,043.97.

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