Share market expectations: 10 factors that will guide Dalal Street next week

Indian benchmark indices, Sensex and Nifty, ended higher on Friday, led by heavy buying in banking and financial stocks. Extending gains for the sixth consecutive session, Sensex ended 353 points higher at 39,467 and Nifty ended 96 points higher at 11,655. During the week, Sensex and Nifty rose 1,032 points (2.69%) and 275 points (2.42%), respectively.

Going ahead, this week is going to be power pack with a slew of macro-economic data are slated to be released, some of which may set direction for markets. Going by the buzz on Dalal Street, here are the top 10 factors that are likely to guide the market going forward.

Expressing views on the outlook of week-ahead, Vinod Nair, Head of Research at Geojit Financial Services said, "The economic data coming out indicates a slow recovery in progress for the Indian economy and as such the GDP data due out next week, is expected to be a non-event, barring any surprise deviation. The market is expected to continue the momentum."

Here are ten factors that will guide Dalal Street next week:

SC verdict on AGR dues

Telecom stocks, Vodafone Idea and Airtel, will remain in focus as Supreme Court's  judgement on the adjusted gross revenue (AGR) is expected this week. The apex court is likely to take a final call on payment schedule to pay the AGR dues. Vodafone Idea and Bharti Airtel had sought a 15-year timeline for the payment.

Auto sales numbers for August

Auto companies will release their monthly sales data for August this week. According to market analysts, the companies are likely to see recovery in retail sales compared to previous months. On the yearly basis, the sales numbers are likely to be below August 2019 levels.

GDP data for June quarter

The government is set to release gross domestic product (GDP) data for April-June quarter on August 31. The unanimous prediction by experts is that the year-on-year contraction in GDP growth could be anywhere between 16 and 25 per cent.

"We expect the manufacturing GVA to contract by 40-45 per cent in Q1 FY2021," Aditi Nayar Principal Economist, ICRA Ltd says. ICRA expects a sharp contraction in the GVA of construction of around 45 per cent, and a contraction of 50-55 per cent in the GVA of trade, hotels, transport, communication and services related to broadcasting in the (Q1) quarter.

India's Manufacturing and Services PMI

Traders will keep an eye on India's Manufacturing PMI for August which is scheduled to be released on September 1, which will give signal whether a COVID-19 economic rebound is sustainable. Services PMI will be released on September 2. The IHS Markit India Manufacturing PMI contracted for fourth straight month in July to 46 from 47.2 in the previous month as businesses remained closed amid coronavirus lockdown extensions.

Foreign fund inflows

Strong foreign fund inflows may fuel rally in the share markets. As per NSDL, foreign portfolio investors (FPI) net investments into equity, was around Rs 45,000 crore in August, which makes it one of the best months for net inflows, as the excess liquidity in global markets found its way to emerging markets like India. They invested Rs 3,301 crore in July and Rs 24,053 crore in June on net basis.

Rupee movement against dollar

The Indian rupee soared 43 paise to close at 73.39 against the US dollar on Friday supported by sustained foreign fund outflow, positive domestic equities and a weak greenback. Forex traders will keep an eye on domestic equity market to maintain their positions.

Coronavirus cases

Market participants will keep a track on coronavirus pandemic as rising cases will have long-term impact on economies. India's COVID-19 tally rose to 35,42,733 with a record single-day spike of 78,761 cases, while the death toll due to the disease climbed to 63,498 with 948 people succumbing to it in a span of 24 hours, the ministry's data, updated at 8 am on Sunday, showed.

Global markets

Investors will focus on macro news, including PMI data, which is due across the globe, alongside the US's non-farm payrolls report on Friday.

US-China trade tensions

The ongoing geo-political tension between US-China will have impact of stock markets globally. The relationship between the world's leading economies has further deteriorated in recent few weeks amid build-up of forces by both sides in the South China Sea and Taiwan Strait.

Stock specific movement

Shares of Kishore Biyani's Future Group and Mukesh Ambani's Reliance Industries will remain in focus as much awaited deal between the two companies was finally signed on Saturday. Reliance Industries (RIL), through its subsidiary Reliance Retail Ventures Limited (RRVL), will be acquiring the retail & wholesale business and the logistics & warehousing business from the Future Group on a slump sale basis for Rs 24,713 crore.

Shares of Bank of Baroda and Anil Ambani group companies will also see some movement after the Reserve Bank of India rejected the public sector lender's request to send Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL) to the National Company Law Tribunal (NCLT) for debt resolution under IBC.

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