First quarter results, rupee, US second quarter GDP data, other factors to pay attention to
Investors added over Rs9 trillion in the week that ended on Friday as Indian stocks saw a consistent upward journey. In the past seven weeks, the Indian stock market recorded its best week this time since February 2021 as it closed at its highest level. Cumulatively, the stock indices, Sensex and Nifty, are up about 3-4 percent this week.
This week, market participants will first react to earnings from index heavyweights Reliance Industries, Infosys, ICICI Bank and Kotak Mahindra Bank. There could be caution and volatility next week especially ahead of the US Federal Reserve meeting and the monthly expiration of futures and options contracts, although in general the bulls are expected to have the upper hand as we have seen a 10 per cent rebound in the past five weeks from lows At 52 weeks, experts said.
Ajit Mishra, Vice President of Research, Religare Broking, said: “Next week is full of excitement as we have many important data and events. First, participants will react to the results of heavyweight indices such as Reliance, Infosys, ICICI Bank and Kotak Bank in early trades. Globally, the US Federal Reserve’s interest rate decision on July 27 and US GDP data on July 28 will be closely watched. Meanwhile, the scheduled expiration of July derivative contracts will keep participants busy.”
The main factors that will affect traders this week
More than 400 companies will release corporate earnings scorecards next week, including 18 Nifty50 companies Axis Bank, Tata Steel, Tech Mahindra, Asian Paints, Bajaj Auto, Larsen & Toubro, Bajaj Finance, Maruti Suzuki India, Tata Motors and Bajaj Finserv, Dr Reddy Laboratories, Nestle India, Shree Cement, SBI Life Insurance Company, Cipla, HDFC, NTPC and Sun Pharma.
Federal Open Market Committee meeting
Globally, investors will be watching closely the results of the Federal Open Market Committee (FOMC) two-day meeting from July 26-27. Most analysts expect a rate hike of 75 basis points which may be along the expected lines as the Federal Reserve in the previous meeting hinted at a 50-75 basis point hike, but if it is 1 percentage point, that might be a bit surprising. Experts said the interest rate movement would aim to curb inflation, but without hurting the labor market.
Aside from the Fed meeting, US GDP growth estimates for the second quarter of the current calendar year will be closely watched by investors next week.
“Crude oil has cooled to $96 a barrel, and many are encouraging this as a sign of easing inflation. Likewise, metals prices are low, cheering commodity consumers, but given the inflationary environment, you never know when prices will start to rise again. “So commodity prices will be a critical stimulus to watch,” said Sonam Srivastava.
Department of fisheries industries
FIIs seem to have renewed their buying interest in India as they converted net buyers on a weekly basis for the first time after several months, buying shares worth over Rs 4,000 crore in the week ending July 22nd. As a result, their net selling for the month fell significantly to Rs 6,400 crore from Rs 10,000 crore for the month of July.
The decline in the dollar index, the stabilization of oil prices, the decline in the prices of other commodities, and reasonable valuations after the recent market drop, may be among the few reasons to revive sentiment in the Bureau of Manufacturing Industries. Their flow will be closely watched in the coming days as the Federal Reserve prepares to announce its interest rate decision next week.
“It will be interesting to see the behavior of FIIs, as they are, after a long time, a net buyer for this week,” said Santosh Mina, Head of Research, Swastika Investmart Ltd..
Domestic institutional investors (DIIs) remained net buyers over the past week, buying shares worth Rs 940 crore, bringing the total monthly outflow to Rs 8,300 crore in July which completely offset the outflow of FII.
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“Technically, the market has strong bullish momentum, but 16800 is an immediate hurdle for Nifty, then 200-DMA around 17000 will be the next critical hurdle, so 16800-17000 will be a sacred supply area where we can expect some trapped profits. A move could lead Decisive above 17,000 leads to a strong market rally. On the downside, 100-DMA will be around 16,500 immediate support level, then 16340 will be the next critical support level,” said Mina.
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