GDP data, Trump visit, F&O expiry among six likely market drivers for the week ahead

NEW DELHI: The domestic equity market will see a host of domestic and global developments in the week ahead, and they may influencing trading positions ahead of the expiry of February series F&O contracts on Thursday.

Key triggers would include India’s December quarter GDP numbers scheduled to be released on Friday, any major outcome from US President Donald Trump’s India visit and this weekend’s G20 meeting and updates on the coronavirus crisis.

The benchmark indices consolidated this past week, as investors moved on from the just-concluded earnings season carefully following commentaries from major Asian economies on the impact of the coronavirus crisis on their respective growth estimates.

Sensex dropped 87 points, or 0.21 per cent, during the truncated week to close at 41,170 on Thursday. Nifty declined 32.60 points, or 0.27 per cent, for the week to end at 12,080. The market was closed on Friday on account of Mahashivratri.

Here are the key events and developments lined up for the week ahead, which will influence specific stocks, sectoral fortunes and the broader market in the week ahead:-

F&O expiry
The single largest factor that will have a bearing on domestic equities next week will be Thursday’s expiry of February series futures & options contracts. Options data suggests the maximum Put open interest (OI) stood at strike price 12,000, followed by 11,800, while maximum Call OI was at strike price 12,300, followed by 12,500.

“There was meaningful Put writing at strike price 12,100, followed by 12,000 while Call unwinding was seen at all the immediate strike prices. Options data pegged the trading range between 11,900 and 12,250,” said Chandan Taparia of Motilal Oswal Securities.

US President’s India visit
Ahead of his visit to India, US President Donald Trump said the two countries could make a ‘tremendous’ trade deal. This may build market expectations. Trump and First Lady Melania Trump will travel to Ahmedabad, Agra and New Delhi over February 24 and 25. There have been reports that India and the US may agree to a trade package as a precursor to a major trade deal. "We're going to India, and we may make a tremendous deal there," Trump said on Thursday.

Outcome of G20 meet
Investors on Monday may react to the outcome of two-day G20 meet, which is under way in Riyadh over Saturday and Sunday. The China virus is a major focus of discussion among the finance leaders from the Group of 20 major economies, Bank of Japan Governor Haruhiko Kuroda said on Friday. Japan and Singapore are on the brink of recession and South Korea on Friday said its exports to China slumped during the first 20 days of February as the outbreak upended global supply chains.

GDP data: Economy in a slow lane
December quarter GDP numbers will be released on Friday.

GDP growth is likely to show a marginal improvement to 4.6 per cent from 4.5 per cent in the previous quarter, said Nirmal Bang Institutional Equities. This brokerage expects GVA growth at 4.4 per cent, marginally above 4.3 per cent reported for the September quarter.

“Agriculture, forestry and fishing is expected to see a rebound to 3.5 per cent growth, supported by a lower base, stable kharif production and a strong start to the Rabi season. Industry (excluding construction) is expected to witness a decline of 0.1 per cent YoY,” the brokerage said.

Updates on coronavirus, possible stimulus
What has eased concerns among global markets is the fact that the pace of new coronavirus cases has slowed, and the Chinese government has been quick to ease liquidity in the system to stem further slowdown in the economy. But China's central province of Hubei on Friday said it has revised the number of new confirmed cases of coronavirus infections on Thursday upward to 631 from 411 after including cases in the province's prison system. The province's health commission said in a statement it now had 62,662 cases as of Thursday, after including 220 cases in Hubei's prison system.

US macro data
Investors would pay heed to US economic releases such as Chicago Fed National Activity Index on February 24, followed by Redbook, Richmond Fed manufacturing index on February 25, API crude oil stock change and MBA mortgage applications on February 26.

Besides, GDP growth rate, durable goods orders, jobless claims, pending home sales on February 27 and PCE price index, wholesale inventories and Baker Hughes total rig count on February 28 will be other US data investors would be watching keenly.