Market Ahead, November 23: Top factors that could guide markets this week

The Indian markets scaled fresh peaks last week, but the bulls' hold weakened as the benchmark indies turned volatile as compared to the last couple of weeks. Although, both Sensex and Nifty rose 1 per cent each in the holiday-shortened week, both the headline indices turned volatile after hitting fresh record high levels.

In fact, it was the broader markets which stole the spotlight with the Nifty Midcap index climbing 2.8 per cent and Smallcap gaining 1.5 per cent.

The volatility in the Indian equity markets is set to continue this week as sentiments oscillate between fear of rising Covid-19 cases globally and optimism over vaccine progress. The expiry of November series derivatives contracts would also add to the volatility.

Besides, owing to a lack of other major domestic triggers, market participants will turn their focus to US stimulus talks and global cues. Stock-specific developments, the Rupee's trajectory and oil price movement will also be tracked.

On Friday, foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 3,861 crore.

Although, analysts say, that they are not buying as aggressively post the first two weeks of November. And, as such, market participants will also keep an eye on foreign flow fund.

According to Angel Broking, mostly all the major positive factors are already priced in by the markets. And although the possibility of immediate levels of 13,100 - 13,200 is still achievable, the rally may not be that smooth now. From the technical point of view, for this week, Friday’s low of 12,730 will now be seen as key support. A move below this will extend the corrective move towards 12,600 - 12,450 levels; whereas on the higher side, 12,963 is the level to watch out for. 

On the Covid front, India's infection tally moved to 91.4 lakh on Sunday, while the recoveries surged to 85.6 lakh, according to Worldometer. The country's death toll has risen to 1.33 lakh.

Now let's have a look at the global cues and today's trade setup.

US shares slumped on Friday on a combination of dwindling aid for the U.S. economy and rising novel coronavirus infection rates. The Dow dropped 0.75 per cent, the S&P 500 fell 0.68 per cent and the Nasdaq ended down 0.42 per cent.

A broad gauge of Asian shares edged up to record highs on Monday morning as hopes for imminent coronavirus vaccines buoyed investor sentiment, but worries over the impact of economic lockdowns and uncertainty over U.S. stimulus capped gains.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.38 per cent, pushing past a previous record high touched on Friday. Trading activity was thin early in the Asian day, with Japanese markets closed for a holiday. Seoul’s Kospi was 1.5 per cent higher and Australia's ASX 200 gained half a per cent.

The SGX Nifty, too, was trading around 80 points up and testing the 13,000-mark. So, traders can expect a gap-up start for the domestic indices today.

Banking-related stocks and financials could be in focus today, after the RBI panel recommended several changes in the banking industry which includes proposals to raise promoters cap to 26 per cent from current 15 per cent in 15-year period and to allow large corporate houses as promoters of banks or take a significant stake in banks.

Besides, Reliance Industries may do the heavy-lifting for the markets today after the Competition Commission of India cleared RIL's bid to buy Future group's retail, wholesale and logistics assets amid legal battle with Amazon.