Dalal Stree
Dalal Street Week Ahead: The RIL AGM, the Adani judgment, and global cues Among 10 Factors Driving Action.
A hawkish interest rate comment by US Federal Reserve Chairman Jerome Powell could push investors to book profits, extending the slump in domestic equities for another week.
The week ahead is also corporately interesting for Dalal Street investors.
Reliance Industries Chairman Mukesh Ambani will address shareholders at the 46th annual general meeting on Monday, which investors will eagerly follow.
The market’s next significant event is Tuesday’s Supreme Court hearing on Adani-Hindenburg.
Given bad global sentiment and domestic events, experts expect market volatility to be strong.
Kanawala said investors can expect returns in accordance with earnings growth till the end of the year because Indian companies’ valuations are high and there is no room for expansion.
Next week’s top 10 factors
Adani-Hindenburg Saga
The Supreme Court will hear the matter on Tuesday after giving SEBI 15 additional days to finish its inquiry.
Apparently, the capital market regulator updated the Supreme Court on its investigations in an affidavit. 22 of 24 investigations are complete, while 2 are ongoing. It is seeking external agency responses to two ongoing probes.
Investors sold Adani group equities across the board on Friday due to caution before the hearing. Adani Transmission lost over 7%, the worst for the stock.
Powell Rate Remarks
Powell said Friday at the Economic Policy Symposium in Jackson Hole that the US Fed may need to raise rates more to control inflation and bring it closer to the objective.
“Although inflation has moved down from its peak – a welcome development – it remains too high,” Powell remarked in his keynote address.
“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” Powell added.
This made Friday US equity trade turbulent. After swinging between gains and losses, key indices rose as investors absorbed the remarks.
Reliance Industries AGM
Reliance Industries’ 46th Annual General Meeting on August 28 will be closely watched. Experts said analysts and investors may be looking for the timeline for IPOs of telecommunication and retail businesses, new segments Jio Financial wants to enter, more 5G rollout updates, and new plans and progress of various projects initiated under the new energy business after the demerger and listing of Jio Financial Services last week.
Q1FY24 GDP Growth
The second component is first-quarter (FY24) GDP growth, slated for August 31. After 6.1 percent growth in Q4CY23 led by private consumption, services exports, and manufacturing, we shall see if Q1 growth matches RBI projections of 8 percent.
The structural trends are essential since global economic slowing will affect our growth. Shailendra Kumar of Narnolia Financial Services said Barclays expects GDP to grow 7.8% YoY in Q1, while SBI Research expects 8.3% growth as public and private bank credit expanded robustly and equally and center and state capital expenditure expanded rapidly in Q1FY24.
July fiscal deficit and infrastructure production will be revealed the same day.
Manufacturing PMI
S&P Global Manufacturing PMI for August will be released on September 1. Most experts expect manufacturing activity to be good as the over 50 threshold signals expansion, but whether it extends fall like in June and July will be seen. India’s manufacturing sector expanded in July, but the S&P Global Purchasing Managers’ Index (PMI) fell to 57.7 from 57.8 in June. It peaked at 58.7 in May, 31 months ago.
Foreign exchange reserves for the week ending August 25 will also be revealed that day. The week ended August 18 reserves were $594.89 billion, down from $601.45 billion.
US GDP Estimates Q2CY23
The August 30 second US GDP estimate for Q2CY23 will be carefully watched by investors worldwide. According to advance estimates released this month, the US economy grew 2.4 percent annually, up from 2 percent in Q1CY23.
Global market participants will also watch July JOLTs job openings & quits on August 29, August unemployment rate & non-farm payrolls on September 1, and August manufacturing PMI statistics. The US unemployment rate should stay at 3.5 percent from last month.
Global Macros
Asian markets’ reaction to Powell’s comments will affect domestic equities. Investors will also watch the dollar index and US treasury yields.
Any dollar index or bond yield increase could prompt foreign investors to sell shares.
FIIs Flow
The US dollar index (trading above 104) and US 10-year treasury yield (trading around 4.25 levels) have led to FIIs net selling at Rs 15,821 crore in the cash segment in August, compared to net inflow in the previous five consecutive months. However, domestic institutional investors (DIIs) have compensated by investing Rs 17,742 crore this month.
FIIs sold Rs 4,895 crore in shares last week, while DIIs bought Rs 8,496 crore.
Technical View
The weekly Nifty50 chart shows an Inverted Hammer pattern, a bullish reversal pattern, after five weeks of correction. Thus, a rebound next week is possible with immediate resistance at 19,300-19,400 levels, and if it closes and sustains above 19,500, the upward journey can continue. If it falls, 19,230-19250 is likely to be the immediate support, and breaking of which can drag the index up to 19,000-18,900, which is the horizontal resistance trendline.
The 10-week EMA (exponential moving average – 19,250) has been a key support level for longs. Arvinder Singh Nanda, senior vice president at Master Capital Services, said a decisive break below 19,200 would imply a continuation of current bearish trend, perhaps bringing prices to 19,000-18,900, around the 21-week EMA (18,876).
F&O Hints
The Options data suggests that the Nifty50 will trade between 19,000, which might be essential support, and 19,500, which could be key resistance.
The maximum monthly Call open interest (OI) was 19,500 strike, followed by 19,300 and 19,400 strikes, with notable Call writing at 19,300 and 19,400 strikes. Put open interest was highest at 19,000 strike, followed by 19,200 and 19,300 strikes, with writing at 19,100, 19,200, and 19,000 strikes.
IPO
The primary market will continue active next week with four public issues opening for subscription, two closing, and six bourse listings. Rishabh Instruments will open its Rs 491-crore public issue from August 30-September 1, Vishnu Prakash R Punglia’s offer will close on August 28, and Ratnaveer Precision Engineering’s anchor book will open for a day on September 1 before the IPO. Pyramid Technoplast and Aeroflex Industries will list on August 30 and 31.
The SME section will have Mono Pharmacare’s public issue open from August 28-30, CPS Shapers’ bidding from August 29-31, Basilic Fly Studio’s launch on September 1, and Sahaj Fashions’ IPO concluding on August 29. According to IPO schedule, Shoor Designs will list first among SMEs on August 29, followed by Crop Life Science and Bondada Engineering on August 30. Sungarner Energies debuts August 31.
Bulk Deals
On August 25, Motilal Oswal Mutual Fund purchased shares in Jio Financial Services, the demerged non-banking financial services branch of the billionaire Mukesh Ambani-owned Reliance business, for more than Rs 750 crore through open market transactions.
According to bulk deal data available on exchanges, Motilal Oswal Mutual Fund purchased 3.72 crore shares, or 0.58 percent of Jio Financial’s paid-up stock, at an average price of Rs 202.8 per share. This stake acquisition cost Rs 754.4 crore.
On August 25, Jio Financial shares closed at Rs 214.50, up 0.49 percent.
One 97 Communications fell 0.6 percent to Rs 899.20 after Antfin sold a share in the company in block agreements. Antfin (Netherlands) Holding B V, a subsidiary of Chinese billionaire Jack Ma’s Ant Group, has sold 2.27 crore equity shares, or 3.59 percent of the Paytm operator.
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