Global cues to set the tone for marktes

Buoyed by the easing of nervousness around Evergrande crisis, US Fed meet outcome, buying by DIIs and positive macroeconomic environment; the benchmark indices scaled fresh record highs last week. The BSE Sensex rose 1,032.58 points, or 1.75 percent, to 60,048.47, and the NSE Nifty jumped 268.05 points, or 1.52 percent, to 17,853.20, taking the five-week gains to 8.5 percent in the indices.

Heightened interest in the index counters led to underperformance of the broader market. In the absence of any major domestic cues, the market is expected to focus on global developments for direction and could see some volatility given the F&O expiry in the coming week. DIIs have net bought Rs 3,048 crore worth of shares, whereas FIIs have net sold Rs 8.38 crore worth of shares in the week ended. Strong buoyancy in revenue collections may help in the public capital expenditure this fiscal to be very close to the budget estimate.

Tax cuts to stimulate growth are unlikely from hereon. It is pertinent to observe that the Finance Ministry has withdrawn expenditure curb on various Central Ministries and Departments with immediate effect. Meetings with the global rating agencies by the finance ministry officials have reportedly been fruitful and sovereign rating upgrade is on cards in next few quarters say sources. Prime Minister Narendra Modi's three-day visit to the United States is expected to give fillip to key sectors ranging from drones to 5G, semiconductor, and solar.

Near term trend will be dictated by F&O expiry, auto sales data, macro-economic data, crude oil prices, rupee movement and global cues like unfolding of Evergrande crises. Bandh call on September 27 by farmers and trade unions received support from all opposition parties; expected to impact bank services, road and rail transport. The IPO mart will keep buzzing next week as well. The initial public offer of Aditya Birla Sun Life AMC, sold in the price band of Rs695-712 per equity share, will open on September 29 and will close on October

1. Paras Defence and Space Technologies, which saw record subscriptions, will likely debut on bourses on October 1.

Heard on the Street: India is no exception to a global IPO frenzy, in which companies ranging from technology startups to jewellers and drug makers have raised about a record $476 billion worldwide this year. Liquidity, low interest rates and demand from retail investors are spurring firms to go public. The IPO market of India is in a feeding frenzy and has reached Rs70,000 crore and is likely to grow further, as a series of companies are lining up with their public offer in the coming months. Zomato, the online food delivery behemoth, is in a sense is leading this market growth. The start-up went public in July, and despite its mediocre growth prospects and losses in consecutive financial years, its shares have soared more than 70 per cent. Paytm, India's leading digital payments company has filed its documents for the preliminary offering. With this public offering, the company has plans to raise about Rs166 billion ($2.2 billion). Moreover, if Paytm's IPO can reach its predicted level, it will be India's largest stock market debut ever, surpassing Coal India's Rs150 billion public offerings in 2010. Additionally, e-commerce giant Flipkart is also planning an IPO.

According to the reports, the company can go public as soon as the fourth quarter of FY2021 – 2022. Also, the digital education startup Byju's, currently valued at $16.5 billion, is getting advice to take advantage of this 'red hot' market. If global investors have to pick an emerging market, the balance is tilting in India's favour after the regulatory action in the China internet ecosystem.

F&O/sector watch

Ahead of the settlement week, on the back of benchmark indices scaling new highs, the derivative segment witnessed robust trading volumes. Maximum Call Open Interest (OI) was seen at 18500 followed by 18000 and 17900 strikes, while maximum Put OI was seen at 17000 followed by 17500, 17700 & 17800 strikes. Call writing was seen at 18500 then 18000 & 17900 strikes with unwinding at 17700 and 17800 strikes, while Put writing was seen at 17900 then 17700 & 17800 strikes with unwinding at 17600 strike.

Auto sales numbers for the month of September, which will start flowing in from October 1, will be closely watched by the street. Industry observers feel that sales are expected to be impacted by the chip shortage but the same could improve towards later part of Q4CY21. Tata Motors, Maruti Suzuki, Mahindra &Mahindra, Eicher Motors, Bajaj Auto, TVS Motor Company, Ashok Leyland, Hero Motocorp and Escorts will be in focus.

Realty stocks witnessed huge buying interest during the week ended.

(The author is a stock market expert. He is former vice chairman of AP Planning Board)