North Korea threat looms, auto stocks in focus, 3 IPOs to hit markets this week
The markets are expected to consolidate but investor sentiment may be subdued in view of geopolitical tension between North Korea and the US
Mumbai: The markets are expected to consolidate but investor sentiment may be subdued in view of geopolitical tension between North Korea and the US. Macro-economic data and action-packed primary markets will also keep investors busy this week.
North Korea warned on Monday that US would pay a “due price” for spearheading a UN Security Council resolution against its latest nuclear test, as Washington presses for a vote on a draft resolution imposing more sanctions on Pyongyang, according to Reuters. South Korean officials have said the North could launch another intercontinental ballistic missile in defiance of international pressure, after the North’s sixth nuclear test, which it said was of an advanced hydrogen bomb, on 3 September.
“A historical look on charts suggests overall positive bias in September for Nifty while indecisiveness in first two weeks have turned investors cautiously optimistic. A lot will depend on participation of sectors since recent support is held due to buying in heavyweights like metals, banks, auto and infrastructure coupled with buying in consumption stocks in the later part of the week. A bearish move in these major sectors will weigh on sentiment,” said Mustafa Nadeem, chief executive officer, Epic Research.
According to Nagaraj Shetti, technical research analyst, HDFC Securities, maximum upmove expected from here could be up to 10,100-10,150 levels, but that area is likely to offer strong resistance and could lead to a sharp decline from the highs.
“The chart pattern and momentum indicator on daily charts is suggesting a possibility of sharp movement in Nifty on either side in the next 1-2 weeks, but the direction of that move is still not clear,” he added.
Auto stocks will be in focus on Monday as increased goods and services tax (GST) cess on mid-sized, luxury and SUV cars will come into effect. On 9 September, the GST council decided to hike cess on mid-sized cars by 2%, taking the effective GST rate to 45%. Also, cess on large cars has been hiked by 5%, taking the total GST incidence to 48%, while that of sport utility vehicles (SUVs) by 7% to 50%.
On macro data front, industrial production data for July will be released on Tuesday. In June, India’s factory output, as measured in the terms of the index of industrial production (IIP), declined by 0.1%, its first fall since June 2013. The inflation data based on consumer price index (CPI) for August will also be released on Tuesday, while wholesale price index (WPI) inflation will be out on Thursday. CPI inflation increased to 2.36% in July.
The primary markets will be buzzing with three new issues this week. Initial public offering of Matrimony.com will open on Monday with a price band of Rs983-985. The company, which runs online match-making business under the BharatMatrimony brand, aims to raise over Rs500 crore through the issue. It comprises fresh issue of up to Rs130 crore and an offer for sale (OFS) of up to 3,767,254 shares.
Construction company Capacit’e Infraprojects Ltd will launch its Rs400 crore initial public offering (IPO) on Wednesday. The company will issue shares in a price band of Rs245-250. The IPO will see the company dilute 24% stake.
ICICI Lombard General Insurance Co. Ltd will open its issue on Friday with a price band of Rs651-661 per share. At the upper end of the price band, the share sale will fetch the two institutions a total of Rs5,700 crore. It is the first non-life insurance company to file for an IPO.
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