List of Factors That Will Be Responsible for Affecting the Market Next Week
Here are some of the responsible factors that will affect the market movements in next week as per the observation of veteran analysts.
Liquidity and NBFC issues
Investors are cautious due to a perceived liquidity crisis in the non-banking financial companies, despite a slew of measures from the government and RBI to address the issue. Analysts believe that after the IL&FS crisis, even the slightest indication of the problem in an NBFC has led to a selloff. Reserve Bank of India is trying to inject liquidity, but confidence needs to be restored in the system to ensure that it continues to function. It is also believed that if the liquidity crunch is allowed to continue unabated, it may lead to solvency issues and that will be disastrous. You will have to see how that gets handled over the next 10-15 days. The effectiveness of RBI’s decision to relax liquidity norms and allow more bank lending to NBFCs will be assessed in the coming days.
Futures and options of October will expire on Thursday and rollover of positions will dominate proceedings through the week. Veteran analysts believe that Friday’s data showed maximum Put open interest was at 10,000 followed by 10,200, while maximum Call OI was at 11,000 followed by 10,600. Also, there was meaningful Call writing at 10,400 followed by 10,600, while Put writing was seen at 10,200 followed by 10,100. It was noted that the option band signified a trading band between 10,200 and 10,500 levels. Last week on Friday, Nifty futures closed in the negative at 10,314 with a loss of 1.24 percent. Volatility may get increased due to F&O rollovers in the market.
Last week on Friday, the rupee settled 29 paise higher at 73.32 against the dollar, amid selling of the US currency by exporters and foreign fund inflows. Analysts highlighted that the domestic unit has been on a bumpy track of late owing to unstable crude oil prices, a stronger dollar, capital outflow and rising bond yields in the US. Indian Currency, the rupee will remain a key factor to watch in the coming days.