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Mahima Roy made post

What are the major trading and investing cues for the week commencing on 25 November 2019 and how to position in the markets?

Answer
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Aditi Sharma answered.
9 months ago


A mix of political and economic issues coupled with the global set up is likely to impact the markets in the coming week. Here are some of the key triggers.

· The government formation in the richest Indian state of Maharashtra continues to be shrouded in mystery. The Supreme Court in its special hearing asked the BJP to produce the copies of the letter to and from the governor for government formation. However, the SC has refused to pull back the deadline to prove the majority before November 30 this Saturday.

· Foreign portfolio investors (FPIs) have infused Rs.17,700 crore into Indian equity and debt in the month with almost the entire inflow coming into the equity markets. The spate of reforms has encouraged the FPIs and that could be positive sentiments for the markets in the coming week.

· The trade deal continues to be elusive even as both the US and China have been putting gin their efforts. While Xi has gone out of his way to assure the markets that he is pushing for a deal, Trump has been sending conflicting signals and that has not gone down too well with the global markets. That will hold the key to the markets in the coming week.

· Oil prices could again be a key factor in the coming week. Of course, the trade deal will be a key factor to push oil prices higher. However, there is rising instance of political unrest in countries like Iran, Iraq, Algeria and Venezuela; all of which are important OPEC nations. This could impact supply and push prices lower. Oil prices have been hovering in a range due to this uncertainty. That has kept the stock markets guessing.

· The 12,000 level will continue to be a resistance for the Nifty and the NSE index has now breached the level four times this year to close lower. This week will be crucial to give a short to medium term direction to markets and the Nifty level of 12,000 will be critical and it will need the Sensex to also decisively break above the 41,000 mark to help Nifty in the progression.

· The November futures series concludes this Thursday and that will infuse volatility into the markets. The series has seen a massive rally in banks and the bank index could come under some pressure on late week unwinding. Also the higher margins will induce quick unwinding of stock futures and that will keep the markets under pressure.

· The all important rebalancing of MSCI indices will happen on November 27. The rebalancing will entail a revamp of allocations. The MSCI India Index will include Berger Paints, Colgate Palmolive, DLF, HDFC AMC, ICICI Pru Life Insurance, SBI Life Insurance, Info Edge and Siemens India in the index. At the same time, the MSCI India Index will drop Glenmark, Indiabulls Housing Finance, Vodafone Idea and Yes Bank from the index. One can look to inclusion / exclusion specific shifts in ETF allocations.

· The all important GDP data for the second quarter ending September 2019 will be released on November 29. This is a much awaited piece of data because it comes in the aftermath of a low 5% GDP growth in Q1. Also, the average estimate for GDP for the second quarter is closer to 4.2% and the actual data becomes important for taking a long term view on growth and rate direction.

· There is also action expected in the IPO market. The IPO of CSB Bank is already oversubscribed with two days to go for closure. Also, the RITES offer for sale opens on 25th November at a floor price of Rs.293.50. The IPO market has been surprisingly robust during the last few months.

Towards the end of the week, one can keep an eye on critical data points like the core sector growth for October, the auto output numbers and the PMI manufacturing.