Sensex Week Ahead: Poll outcome, House session to steer market

NEW DELHI: Going by speculations and exit polls, the BJP is all set to paint Gujarat and Himachal Pradesh in saffron, thus expanding their footprint in two more states. The outcome of the last and the biggest political battle of 2017 will be known on Monday.

Friday was the perfect showcase of investor sentiment on Dalal Street, as they cheered exit poll outcome and drove the benchmark indices comfortably into the positive zone.

The BSE Sensex added 216 points to end the session at 33,462, while the broader Nifty50 index of NSE gained 81 points or 0.79 per cent to end at 10,333, with 33 constituents ending in the green and 17 in the red.

"In the coming week, a lot will depend on the election outcome and on the number of seats for the ruling party. An outperformance by the ruling party will give new energy to the bulls to take the command and drive Nifty to new highs towards the 10,500 level," says Mustafa Nadeem, CEO, Epic Research.

Let’s find out what will sway the market sentiment in the week ahead:

Election outcome is key
Investors on Dalal Street will closely monitor how the results pan out on Monday, when the counting of ballots cast during the Gujarat and Himachal Pradesh assembly elections will take place. Advancing equity indices during the last two sessions of the trading week show the stock market wants political stability in the country. However, nothing could be certain at this time and if, the results turn out against the saffron party, the market is likely to take a deep dive.

Tech charts show Nifty likely to test 10,400
The Nifty50 index witnessed a gap-up opening on Friday, as market sentiment was boosted by Thursday’s exit poll outcome, which projected the BJP to win both Gujarat and Himachal Pradesh assembly elections. However, the session remained largely in a range. During the process, the index formed a ‘Rising Window’ candlestick pattern on the daily chart. Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory, said, “Monday is most likely to see some more upmove happening. As we go ahead with the results of the Gujarat elections coming in, we might see increased volatility and the markets attempting to test the 10,400-mark.

Tobacco stocks may light up
Shares of tobacco firms are likely to make merry next week as the Karnataka High Court on Friday quashed government rules that mandated stringent graphic health warnings on tobacco products, in a decision seen as a major victory for the tobacco industry and a setback for health advocates. According to a Reuters report, the court struck down the government’s 2014 notification that required 85 per cent of a tobacco pack’s surface to be covered in health warnings, said Aradhana L, a lawyer at Poovayya & Co, who represented tobacco companies including ITC and Godfrey Phillips India.

YES Bank, IndusInd to hog limelight
Private sector lenders YES Bank and IndusInd Bank will be watched by investors closely, when trading resumes on Monday as both the stocks will be included in the benchmark index Sensex, replacing drugmakers Cipla and Lupin. With the changes in the index, weightage of BFSI space in the BSE 30 will reach at its all-time high level, whereas weightage of healthcare sector will hit seven-year low. The S&P BSE Sensex measures performance of the 30 largest, most liquid and financially sound companies across key sectors that are listed on BSE.

Key bills to be tabled in Parliament
The winter session of Parliament, which kicked off on Friday, December 15, will have a total of 14 sessions. The government has a slew of important Bills on its agenda this time. For instance, the Financial Resolution and Deposit Insurance Bill, 2017 is slated to come up during this session. This Bill aims to limit the impact of the failure of financial institutions like banks and NBFCs. It has also been cleared by the standing committee. The session will conclude on January 5, 2018.

Global cues
Among global macros, the US GDP data for Q3 is slated to be released on Thursday, December 21, 2017. Bank of Japan (BoJ) monetary policy statement will be unveiled on Wednesday, December 20, 2017. This apart, crude prices movement will also play a key role in deciding market direction. On Friday, oil prices were mixed lingering below two-year highs as the continuing outage of a North Sea pipeline gave support, while climbing US output and weak gasoline demand kept a lid on gains.