Market Ahead Podcast, Oct 25: Factors that could guide markets this week

Equity investors were caught on the wrong side of the markets last week as valuation concerns, coupled with persistent selling by FIIs, kept upside in check on the bourses.

The BSE Sensex index and Nifty50 declined about a per cent each during the week to end at 60,822 and 18,115 levels, respectively, last Friday.

While analysts remain cautious for the week ahead as well, they say the markets are likely to stabilize with sectoral rotation taking place.

Markets saw profit booking post a sharp run-up ahead of results season Broader markets may stabilize this week Sectoral rotation to continue

For Nischal Maheshwari, who is CEO – Institutional Equities at Centrum Broking, last week’s correction had valuation and tapering concerns at play.

Markets are preparing for Fed tapering FII selling is creating pressure.

Going ahead, volatility may remain high due to corporate earnings and primary market action. The key driver for today’s session will be Q2 results of Reliance Industries and ICICI Bank, which were  released post market hours on Friday and Saturday, respectively.

During the rest of the week, investors’ reaction to September quarter earnings of L&T, Maruti Suzuki, ITC, Axis Bank, Cipla, Adani Ports, and Titan will sway the indices.

That apart, the initial public offer of India’s biggest cosmetics etailer Nykaa may also catch investor fancy this week.

FSN E-Commerce Ventures, the parent company of Nykaa, will launch its IPO on Thursday, October 28, to raise over Rs 5,355 crore at a price band of Rs 1,085-1,125 per share.

Separately, Fino Payments Bank is also expected to launch its Rs 1,300-crore IPO on Friday, October. But will these primary share sales affect secondary market inflows? 

Primary market issues may divert flows. There could be lesser action in secondary market.

That said, analysts believe issue pricing and investor appetite will play an important role in trading activity.

A lot will depend on IPOs’ valuation. There’s a lot of enthusiasm in the primary market. Pricing should be such that nothing is left on the table for investors

As per tech charts, the 50-share index is likely to trade within a range of 17,750 and 18,375, while the Sensex may trade within a broad range of 59,700 and 61,900.