Markets

Developments in PNB fraud case, F&O expiry & global cues to steer market

NEW DELHI: Bulls and bears, bears and bulls – it's been heck of a seesaw!

After an amazing 2017 and an equally good January 2018, investor sentiment took a hit in a big way in the wake of back-to-back adverse events that have sent the market into a tailspin. First, it was the Union Budget, then global selloff and now the PNB scam — the bulls have gone off the winning course.

On Friday, the S&P BSE Sensex shed 287 points to close at 34,011 while the Nifty50 index of the National Stock Exchange (NSE) lost nearly 100 points to settle at 10,452. On a weekly basis (Feb 9-Feb 16), the indices remained almost unchanged, with the Sensex gaining merely 5 points and the Nifty losing 3 points.

"The market has corrected 5 per cent from the recent all-time high and we can assume that a large portion of this consolidation is finding a floor in the short-term. But investors are cautious given widening of trade deficit, rise in bond yields and global volatility. On the other hand PSU banks will continue to underperform in the near term on concerns of possibility of alleged scam which may extend to some other banks," said Vinod Nair, Head of Research at Geojit Financial Services.

Going forward, a lot will depend on the developments around PNB fraud. The movement of global stocks and crude prices will keep the investors on the edge. Let's get into a little detail to all the events that are likely to steer market direction next week –

PNB mess, banking stocks
Punjab National Bank, India's second largest state-run lender, shocked the nation on Wednesday when it announced it had discovered fraudulent transactions worth Rs 11,400 crore in one of its Mumbai branches. Reacting to the news, the stock took a heavy beating and continued to bleed for three straight sessions. During the week, it tanked almost 20 per cent. Other state-run lenders also felt the heat and headed south. On Friday, the Nifty PSU Bank index slipped 2.49 per cent to settle at 3,189.05, with 11 out of 12 constituents ending in the red. Banks could take a hit of at least $2.7 billion from loans and corporate guarantees provided to Punjab National Bank in a $1.77 billion fraud case, Reuters reported on Saturday quoting the I-T department.

F&O expiry
The market is likely to witness volatility next week, as traders will roll over positions in the F&O segment from the near month February 2018 series to March 2018 series. The February 2018 F&O contracts expire on Thursday, February 22.

Beware! Nifty may see further weakness
Friday was the second straight session, when traders on Dalal Street turned indecisive above the 10,600 level. The Nifty50 index ended up forming a bearish candle on the daily chart. It stares at further weakness in the coming week. Any fall below the 10,480 level could intensify selling in Nifty50, analysts warned. "The index has been facing hurdle at its 50-day moving average for last eight sessions and a cluster of supply is visible in the 10,600-10,650 zone. If it sustains below the 10,480 level, then weakness could continue to 10,333 and then 10,276 levels," said Chandan Taparia of Motilal Oswal Securities.

Aster DM all set to debut
Shares of private healthcare service provider Aster DM Healthcare are likely to make debut on bourses next week. The initial public offer (IPO) of the company, which got concluded last week, was oversubscribed 1.31 times. The company had fixed a price band of Rs 180 to Rs 190 for the issue. Aster DM Healthcare is one of the largest private healthcare service providers which operate in multiple GCC (Gulf Cooperation Council) states and in India.

Watch the Fed minutes
The minutes of Federal Reserve's last monetary policy review will be released on February 21, 2017 (Wednesday). The US central bank left the benchmark interest rate unchanged in its first policy meeting of 2018. In the last meeting of Fed Chair Janet Yellen’s tenure, the policy-setting Federal Open Market Committee (FOMC)said while price measures have remained below the central bank’s two per cent target, “inflation on a 12-month basis is expected to move up this year.” As predicted, US consumer prices rose more than expected in January. The Consumer Price Index increased 0.5 per cent last month. It had risen 0.2 per cent in December.

Rupee movement another key factor
The movement of domestic currency will be tracked keenly. On Friday, the rupee sank 30 paise to end at a fresh one-week low of 64.21 against the US dollar on rising global crude prices and worsening trade deficit. This was its biggest fall since February 1, when it had lost 44 paise.

Crude price movement
Oil prices edged up on Friday. Brent crude futures settled 51 cents, or 0.8 per cent, higher at $64.84 per barrel, after touching eight-day highs. The global benchmark ended the week up more than 3 per cent, partially recovering from a decline of more than 8 per cent last week, said a Reuters report.

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