Mkts ride earnings wave amid global headwinds

Driven by strong renewed buying in IT stocks, upbeat Q2 earnings, appreciation in the rupee with RBI measures, and sustained support from DIIs;equity markets extended their rally for the second consecutive week, posting their strongest weekly gains since April.

For the week, the Sensex rose 2256.94 points, or 3.11 per cent, to 74,729.27, while the Nifty rose 625.7 points, or 2.77 per cent, to 23,146.15. The broader markets underperformed the benchmark indices, with the Nifty Midcap 100 index rising 0.6 per cent, while the Nifty Smallcap 100 index closing marginally lower, declining around 0.1 per cent.

Among sectoral indices, the Nifty IT index surged 11.7 per cent, posting its biggest weekly gain in 18 years, driven by better-than-expected Q2 earnings. FIIs extended their selling streak to the eighth consecutive week, offloading equities worth Rs 8,990.50 crore. Meanwhile, DIIs continued to provide support to the market, purchasing equities worth Rs 7,812.81 crore during the week.The Indian rupee snapped its two-week losing streak, recovering 178 paise to close at 94.95 per dollar on October 16, compared with 96.73 on October 9.

During the week, the domestic currency traded in a range of 94.67–95.99 against the US dollar.Reports say that the RBI has used up about half of the more than $140 billion it mobilised through special measures like FCNR(B) deposit drive to bolster its foreign exchange war chest earlier this year, highlighting pressure on the rupee and the central bank’s determination to turn the tide.

Reserve Bank of India (RBI) aggressively sold dollars to prop up the rupee, one of Asia’s worst-performing currencies.

Pressure on the rupee from high oil prices, a recent surge in US Treasury yields and ongoing foreign equity outflows has compelled the RBI to step up intervention against local currency weakness, in order to limit knock-on risks to inflation and broader financial stability.

Annual wholesale inflation accelerated at a faster-than-expected 11.39 per cent in September, driven by a surge in oil prices amid persistent energy disruptions from the Iran war.The reading was the highest under a new series that started in June with 2022-23 as the base year.

When Finance Minister Nirmala Sitharaman expressed her willingness to hear the debate on demands for relief / changes in STT and LTCG taxes; observers are amused that markets found a reason to celebrate and gained 3.5 per cent per cent in the next few sessions. It is important to understand that FM did not promise and said will only consider.

At the start of coming week,markets will react to the quarterly earnings of major banking players, including HDFC Bank, Axis Bank and ICICI Bank, in early trade on Monday, alongside developments on the global front over the weekend.

Jio Platform’s IPO is priced at Rs 1,065-1,119 per share and will open on October 21, closing on October 23. At the upper end of the price band, the grey market premium points to an indicative listing price of Rs 1,340 per share.At the upper price band, the company’s post-issue market capitalisation is estimated at Rs 10.30 lakh crore.

Going forward, markets are likely to remain volatile, with heightened volatility in international crude oil prices, foreign fund flows, global bond yields and corporate earnings determining near-term direction.

The Q2 earnings season will be a key trigger, particularly for Banking, IT, Automobiles, Consumer goods and Industrials. Inflation trends, rupee movements, liquidity conditions and government policy announcements will also remain important. Overall, the outlook remains cautious, with sustained recovery depending on earnings resilience, moderating inflation and improved foreign investor sentiment.

FUTURES & OPTIONS / SECTOR WATCH

Mirroring the change in sentiment in the underlying cash market, the derivative segment witnessed exuberant trading activity. The Nifty traded in a range of 861.40 points and ended the week with a net gain of 625.70 points (+2.78 per cent).The most significant technical development of the week was Nifty reclaiming its 200-week Moving Average, currently at 22,651.47, after slipping below it in the preceding weeks. The recovery was led by strong buying interest in IT majors on the back of improving investor sentiment and encouraging quarterly earnings.

In the options segment, strong Call open interest for Nifty was observed at the 23,500 and 23,200 levels while major Put open interest was concentrated at the 23,000 and 22,800 levels. For Bank Nifty, significant Call open interest was seen at 56,000 level whereas notable Put open interest was also placed at the 55,000 level. Implied volatility (IV) for Nifty’s call options settled at 12.81 per cent while put options concluded at 13.1 per cent. The India VIX, a key indicator of market volatility concluded the week at 14.02 per cent.

The Put-Call Ratio Open Interest (PCR OI) stood at 1.10 for the week.Overall, the near-term outlook has turned cautiously bullish, with sustained buying momentum required to confirm further upside. The coming week is likely to see markets attempting to consolidate the previous week’s gains. Multiple overhead resistance levels may prevent anrunaway rally.

The 23,300 and 23,550 levels are likely to act as immediate resistances andsupports are at 22,950 and 22,650. Traders should protect existing profitable positions with trailing stop-losses, while adding fresh exposures should be selective and staggered.Avoid chasing sharp advances and instead look for opportunities in stocks displaying superior relative strength and improving technical structures.The trading week will also be truncated, with Tuesday, October 20, a trading holiday due to Dussehra.

Stocks looking goodAngel One, CG Power, GAIL, KPIT, Tech Mahindra, Premier Energies and Voltas.Stocks looking weakareEnrin, NAM India, Nestle,Powerindia, RBL Bank, TI India, and SBI Cards.

CESC Limited

An integrated power utility company belonging to RP-Sanjiv Goenka Group, it is engaged in the generation and distribution of electricity.The company caters to over 4.9 million consumers, has 5 thermal power plants and renewable portfolio of 1.8GWp. Its business consists of Kolkata operations as well as other generation and distribution ventures across the country. Its Kolkata operations include distribution of electricity, with its own generation facilities, across its licensed area in Kolkata, Howrah, Hooghly, North and South 24 Parganas, West Bengal. Its generation projects include operational thermal and renewables projects, which are owned and operated by its subsidiaries.

The company has a distribution license for Greater Noida, Uttar Pradesh; three distribution franchisees (DFs) in Kota, Bharatpur and Bikaner in Rajasthan; and THE DF in Malegaon, Maharashtra. Its subsidiaries include Bhadla Three SKP Green Ventures Private Limited, Purvah Hybrid Power Private Limited, Purvah Renewable Power Private Limited, ANP Renewables Private Limited, and SHN Green Power Private Limited.

The company entered into SPA with ReNew to acquire 1.4 GWp operating renewable portfolio at an enterprise value of Rs. 4,859 Cr and operationalized 435 MWp solar projects during the last quarter. Buy on declines for medium term target of Rs200.