How to invest in the share market on F&O expiry week
Key factors that will decide how to invest in the share market on F&O expiry week (24th-28th Aug)
How to invest in the share market on F&O expiry week: Indian markets gained last week with the support of global cues in the absence of any major domestic trigger. Weekly basis, benchmark indices made decent gained but smallcap and midcap indices outperformed the benchmark. The better than expected quarterly earnings and attractive valuations are the reasons for better performance in Midcap and Smallcap shares in the month of August.
You can read the last week’s market updates here.
In the coming week, the market will remain volatile due to monthly F&O expiry where traders will rollover their position from August to September series. The August 2020 F&O contracts are going to expire on Thursday 27th August 2020. Other then F&O expiry there are few more factors that will influence the market next week, let us check how to invest in share market on F&O expiry week
Key factors that will guide us on how to invest in the share market on F&O expiry week.
Global market cues
The global market will play a vital role to decide the market mood next week. Last week the US S&P 500 index hit the record high. The US housing market sees a strong rebound while jobless claims rise back above 1 million in the last week. The lack of progress on a new fiscal stimulus and tension between the US-China are the concerns in the US market now.
The Flash PMI survey in Eurozone shows that there is a slowdown in economic recovery. The European markets fell last week due to fresh surges in coronavirus cases and new restrictions imposed in the region. While the UK’s composite PMI surged and its economy is recovering fast.
Japan’s Nikkei was down last week due to its economy contracted sharply, its GDP fell 7.8% in the June end quarter. Whereas China’s Shanghai gained slightly last week but its relation with the US is deteriorating and its a concern for the global market.
Traders should closely follow China’s industrial profits data (YTD) for July on 27th August, the US durable goods orders for July on 26th August, and Europe consumer confidence data for August on 28th August.
The above news can decide the global market trend for the next week. To know the global market direction and how to invest in the share market in the next week traders can also follow our Daily Morning Market updates.
Coronavirus pandemic
The spread of coronavirus and its impact on the domestic and global economy will be closely watched in the next week. Globally there are more than 2.2 cr confirmed coronavirus cases registered as of now. In India confirmed coronavirus cases are crossed more than 30L. The second wave coronavirus cases in the US are in the declining stage whereas there is a new surge in the European countries.
Traders should be closely watched out for the fresh restriction imposed in the regions and their economic impacts. Any further news of lockdown and restriction can create a negative sentiment in the market.
Progress of monsoon
Good progress of monsoon particularly in August after some deficit in July raises hope of bumper Kharif harvest. Earlier there were reports about pink bollworm and locust attack but there was no adverse impact on the corp.
According to the compiled data, the area that sown under rice, oilseeds, pulses, cereals, and cotton have increased this year. The quantum and spread of monsoons have been good for the production of these corps.
We expect positive news on the progress of monsoon from the government agencies by this week or at the end of August. A good monsoon is important because it will control food prices and high inflation. Any positive news on the monsoon will make the market cheers next week.
Technical levels
To know how to invest in the share market indices during the F&O expiry week we have to check out the trend of Nifty and Bank Nifty first. The technical levels given below are based on some indicators and calculations.
The Nifty share price in futures for next week
Primary Trend of Nifty share price futures next week: Mild positive
Range-Bound Trend of Nifty futures: All up Moves Initiates Profit Booking (Sale) @ 11500 whereas All Down Moves Initiates Short Covering (Buy) @ 11250
If Nifty share price in futures Moves Above 11409 and sustain. Then you should Buy with 1st Target of 11441 during the day or week with a Stop Loss of 11350 FOR the Target of 11441- 11462 – 11495- 11530
If Nifty share price in futures Moves Below 11350 and sustain. Then you should Sell with 1st Target of 11328 during the day or week with a Stop Loss of 11252. FOR the Target of 11328- 11285- 11255-11216
Bank Nifty share price in futures for next week
Primary Trend of Bank Nifty share price in future for next week: Positive
Range-Bound Trend of Bank Nifty share price in future: All up Moves Initiates Profit Booking (Sale) @ 22920, whereas All Down Moves Initiates Short Covering (Buy) @ 22000
Suppose Bank Nifty share price in future Moves Above 22430 and sustain. Then you should Buy with the 1st Target of 22520 during the day with a Stop Loss of 22150. FOR the Target of 22520 – 22650- 22780- 22925
If Nifty Bank share price in future Moves Below 22150 and sustained. Then you should Sell with the 1st Target of 22080 during the day with a Stop Loss of 21880. FOR the Target of 22080 – 22000- 21880-21750
FIIs and DIIs investment outlook
FIIs were buyers and DIIs were the seller in the cash market last week. DIIs are continuously selling for the last two months. The market may turn negative if both become sellers and vice versa. So traders need to follow the FIIs and DIIs movement closely.
In the month of August so far FIIs bought Rs 13,695.13 cr whereas DIIs sold Rs 8671.60 cr in the cash segment.
Conclusions:
The domestic and global markets are currently running on hopes of economic recovery and liquidity. The domestic markets are mostly dependent on global market cues. The above mentioned key factors will play a vital role next week. The traders should watch out the above factors closely to know how to invest in the share market on expiry week. Other then this, traders should closely watch the outcome of GST meet on 27th Aug, Indian rupee, and Crude Oil price movement.
You can also read, MONEYBHAI Review: Here’s what you should know
Happy Investing!!
Editor’s Desk
