Share market expectations: 5 things to know before tomorrow's opening bell

The benchmark equity indices - Sensex and Nifty - logged gains for the fifth session in a row on Tuesday. The gains were on account of heavy buying in financial stocks as investors focussed on monsoon progress and ignored rising coronavirus cases. After swinging between gains and losses during the session, the BSE Sensex finally ended 187.24 points, or 0.51 per cent, higher at 36,674.52; while the NSE Nifty settled with 36 points, or 0.33 per cent, gains at 10,799.65 - the longest winning streak for both gauges in a month. Broader midcap and smallcap indices rose up to 0.58 per cent.

"A mixed trend was witnessed on the sectoral front wherein IT, banking and auto witnessed noticeable surge while metals, oil & gas and power ended in losses. Global markets, especially the US, are not showing any sign of slowing down despite the rising COVID-19 cases. And in line with others, our markets are also rejoicing in this phase. At the top of it, the banking index finally gained traction as it outdid the benchmark in today's trade. And, indications are in the favour of a steady up move from hereon and that could help the Nifty index to test 10,950 ahead," said Ajit Mishra, VP - Research, Religare Broking.

5 things to know before opening bell on Wednesday

Quarterly earnings

Since Tata Consultancy Services (TCS) will kick off the earnings season by announcing its financial numbers for June quarter on Thursday, investors will be preparing a new strategy to move ahead accordingly. The strategy would be based around the impact of the coronavirus lockdown.

Factory output, inflation data

Official data on industrial production, and retail as well as wholesale inflation will be released this week. The government has not been releasing complete inflation data for the past few months amid unavailability of complete data due to coronavirus lockdown. The investors and traders would be keenly watching the numbers this time.

Monsoon trend

Movement of monsoon winds and its progress on the domestic grounds would also be closely watched in tomorrow's trade."Bulls were in complete control as evident in the breadth of the market with financials leading the charge. A good monsoon also cheered a host of companies in auto parts and farm equipment as a feel good factor returned with more participation seen from investors," said S Ranganathan, Head of Research at LKP Securities.

Coronavirus cases

Experts cautioned that rising COVID-19 cases will continue to weigh on investors' risk appetite going ahead. The number of cases around the world linked to the disease has crossed 1.16 crore and the death toll has topped 5.38 lakh. In India, the number of infections spiked to 7,19,665 and the death toll rose to 20,160.

Weak Asian bourses

Shares elsewhere in Asia traded weak. Bourses in Shanghai ended with marginal gains, while those in Hong Kong, Tokyo and Seoul closed in the red.

What analysts say

"Market is factoring in positive macroeconomic data, strong rural economy and optimism over potential COVID vaccine emerging soon. Rural economy has seen lesser damage from the COVID pandemic, led by robust rural income, strong start to monsoons, robust Kharif sowings, and sharp hike in allocation to MGNREGA. Further hopes have now shifted to potential FY22E earnings recovery. However Nifty is trading at 21x one year forward P/E (premium to its long period average of 19x) and is not looking as attractive as it did in March 2020. Hence despite the near term momentum, we would be more cautious/defensive in our approach going ahead," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

"The short term trend of Nifty continues to be positive. Today's candle formation could indicate a possibility of minor downward correction from these levels or from highs of around 10,850-10,900. Any downward correction up to 10,550-10,600 levels is expected to be a buy on dips opportunity in the market ahead," said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

"Since the last several days, Nifty has been trading above 50 day moving average with an upward rising channel formation which suggests a further upside movement. Based on the above technical structure, we expect Nifty resistance at 10,850-10,900 while downside support comes at 10570," said Sumeet Bagadia, Executive Director, Choice Broking.