Earnings report and global factors to steer markets

On the back of Trump’s statement that he is ready to sanction Russia, but on the condition that all NATO allies agree to completely halt purchases of Russian oil and implement their own sanctions; it is important to track trade talks between India and the EU

Supported by news flow of easing India-US trade tensions, expectations of rate cut by the US Federal Reserve and reports that the EU may reject US tariff proposals on India’s Russian oil imports;marketstraded with positive bias helping indices to post biggest weekly gain in nearly 3 months.

The Nifty added 373 points or 1.50 percent to end at 25,114, while the Sensex added 1193.94 points or 1.47 percent to end at 81,904.70.In the broader market, the BSE Mid-cap Index jumped 1.6 percent and the BSE Small-cap index rose 1.5 percent.

FIIs extended their selling for the 11th straight week with equity sales worth Rs 3,577.37 crore. On the other hand, DIIs continued their buying for straight 22nd week with purchases worth Rs 13,703.23crore.Indian rupee touched fresh record low of 88.45 against the US dollar.

The FII action going ahead could also hinge on the US Federal Reserve’s monetary policy decision in the week ahead. There are strong expectations of a 25 bps rate cut.FIIs may reduce their selling and may even turn buyers amid indications of a turnaround in the Indian market.

Retail inflation rose marginally to 2.07 percent in August, breaking a 10-month cooling trend, as food inflation continued to be in negative territory for a third consecutive month. Inflation remained below 3 percent for the fourth straight month, rising from an eight-year low of 1.61 percent in July.

Economists expect inflation to average around 3.3 percent in the current fiscal. GST effect to be visible from coming months. An analysis shows that rationalisation of rates announced by GST Council on September 4 could bring down inflation by 100 bps or 1 percentage point in case of a full pass through.

The analysis shows that nearly 14 percent of the inflation basket is set to become cheaper as cuts become effective from September 22.Domestic gold prices hit an all-time high of Rs1,12,750 per 10 grams. It is pertinent to observe that gold prices have risen at the fastest pace since 1979 in rupee terms and have outperformed benchmark indices.

On the back of US President Donald Trump’s statement that he is ready to sanction Russia, but on the condition that all NATO allies agree to completely halt purchases of Russian oil and implement their own sanctions; it is important to track trade talks between India and the European Union to meet a year-end deadline for signing the free trade pact.

Near term movement of the market will be dictated by expectations over Q2 earnings, international crude oil prices, rupee-dollar equation, forthcoming US Fed meeting and global cues. Trump tantrums will continue to trigger both positive and negative tremors.

IPO Corner:The Securities and Exchange Board of India (SEBI) has approved sweeping changes to public offer norms, IPO allocations, related party transactions and foreign investor access, aimed at easing compliance and broadening market participation.The overall anchor reservation has been enhanced from one-third to 40 per cent, with one-third reserved for mutual funds and the rest for insurers and pension funds.

The cap on the number of anchor allottees has also been relaxed to allow greater flexibility for large FPIs operating multiple funds.The easing coincides with an increase in international outflows in recent months, which are being fuelled by high US tariffs, poor profitability, and high valuations.The three recent IPOs of Urban Company, Shringar House and Dev Accelerator received overwhelming demand from investors as investors committed a cumulative amount of Rs 1.22 lakh crore.

The strong demand underlines investor confidence. However, the exuberance in the IPOs is suited only for high-risk, high-reward investors and for listing gains. That is another testament to the fact that investing without education and research will ultimately lead to regrettable investment decisions. Research is much more than just listening to popular opinion.

FUTURES & OPTIONS / SECTOR WATCH

Mirroring the sentiment in the cash market over the past two weeks, the Nifty futures has witnessed a gradual pullback of nearly 700 points, culminating in its highest weekly close in the last eight weeks—a sign of improving sentiment and technical resilience.

Barring Nifty Consumer Durables (down 1 percent), all other indices ended in the green with Nifty Defence index rising 7 percent, Nifty IT index jumping over 4 percent on the back of Infosys buy back and Nifty PSU Bank index adding 3 percent and other indices like Nifty Auto, Metal and Pharma logging 2 percent each.In the options market, prominent Call open interest for Nifty seen at the 26,000 and 25,500 strike, while the notable Put open interest was at the 25,000 and 24,800 strike.

Implied volatility (IV) for Nifty’s Call options settled at 10.65%, while Put options concluded at 11.75%. The India VIX, a key indicator of market volatility, concluded the week below 11 at 10.5%, a multi week low. The Put-Call Ratio Open Interest (PCR OI) stood at 1.22 for the week.After two weeks of consecutive gains, the Nifty appears well-positioned for a potential breakout. Crucial resistance levels are the zones of 25150-25200 and 25400-25500.

Any sustainable move above the level of 25200 will lead to a sharp upside rally up to the level of 25500. While on the downside, the zones of 24950-24900 and 24600-24700 are likely to provide a cushion in case of any immediate decline.As long as the Nifty sustains above 24,850, the undertone remains positive. For the Bank Nifty,the zone of 55100-55200 will act as an immediate hurdle.

Any sustainable move above the level of 55200 will lead to extension of pullback rally up to the level of 56000 in the short term. While on the downside, the zone of 54400-54300 will act as crucial support.

Stocks looking good are BEL, Bajaj Finance, HAL, ICICI Bank, NALCO, SBI Life and MCX. Stocks looking weakare Asian Paints, Bandhan Bank, ITC, Jubilant Foods, Sona Comstar, Trent and Wipro.

STOCK PICKS

Gland Pharma Limited

The companyis a global injectable manufacturer with a strong focus on the CDMO business model. The company has evolved into a prominent entity in the global generic injectables market, with operations extending to over 60 countries including the United States, Europe, Canada, Australia, and India. Primarily functioning under a B2B model, the company provides comprehensive services such as contract development, dossier compilation, technology transfer, and manufacturing across various delivery systems.

The company specializes in sterile injectables, oncology, and ophthalmic, with a specific focus on complex injectables, New Chemical Entities (NCE)-1s, First-to-File products, and 505(b)(2) filings. The company manufactures a range of dosage formulations, including solutions, suspensions, and lyophilized products. Its product portfolio includes delivery methods such as pre-filled syringes, vials, ampoules, bags, and dry powder injections.

It also produces generic injectables in liquid, lyophilized, suspension, and pre-filled syringe forms. A key strategic milestone was the seamless integration of its first overseas acquisition Cenexi, a leading European Contract Development and Manufacturing Organization (CDMO) with a strong footprint in sterile injectables and complex formulations. Cenexi, a well-recognised European CDMO, brings significant expertise in sterile liquid and lyophilised fill-finish formulations, including complex oncology products. This acquisition aligns with Gland’s long-term strategy to establish a manufacturing footprint in Europe and expand its CDMO offerings in the branded CDMO segment.

All manufacturing sites of Cenexi are approved by major global health authorities including US FDA, EMA, and ANVISA, reflecting a strong compliance foundation.A major initiative in our pipeline is the establishment of a biosimilar-focused Contract Development and Manufacturing Organisation (CDMO), with capabilities extending well beyond biosimilars.

This includes a strategic emphasis on biologics, complex fill-finish processes, and emerging dosage formats, positioning us to serve the growing demand for next-generation biopharmaceuticals and strengthen our footprint in the rapidly advancing biologics space. Buy on declines for medium term target of Rs3,250.