Investors added over a whopping amount of Rs 9 trillion in the week that ended on Friday as the Indian stocks witnessed a consistent upward journey. In the past seven weeks, the Indian stock market marked its best week this time since February 2021 as it closed at its highest level. Cumulatively, the equity indices, Sensex and Nifty, rose around 3-4 per cent during this week.
This week, market participants will first react to earnings of index heavyweights Reliance Industries, Infosys, ICICI Bank, and Kotak Mahindra Bank. There could be caution and volatility next week especially ahead of US Fed meeting and monthly expiry of futures & options contracts, though overall bulls are expected to have an upper hand as we have seen 10 percent recovery in the last five weeks from 52 week lows, experts said.
Ajit Mishra, VP – Research, Religare Broking, said: “The coming week is action-packed as we have several important data and events lined up. First, participants will react to results of the index heavyweights like Reliance, Infosys, ICICI Bank and Kotak Bank in early trades. On the global front, the US Fed decision on interest rate on July 27 and the US GDP data on July 28 will be closely watched. Meanwhile, the scheduled expiry of July month derivatives contracts will keep the participants busy.”
Key Factors That Will Affect Traders This Week
Q1 Results
More than 400 companies are going to release their corporate earnings scorecards next week, including 18 Nifty50 firms which are Axis Bank, Tata Steel, Tech Mahindra, Asian Paints, Bajaj Auto, Larsen & Toubro, Bajaj Finance, Maruti Suzuki India, Tata Motors, Bajaj Finserv, Dr Reddy’s Laboratories, Nestle India, Shree Cement, SBI Life Insurance Company, Cipla, HDFC, NTPC, and Sun Pharma.
FOMC Meeting
Globally investors will keep a close watch on the outcome of a two-day Federal Open Market Committee (FOMC) meeting during July 26-27. Most analysts expect a 75 basis point hike in interest rates which may be on expected lines as Fed in the previous meeting had hinted at 50-75 bp hike, but if it is one percentage point then that could be a bit of a surprise. The rate action will be aimed at taming inflation but without hurting the labour market, experts said.
Apart 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.
Commodity prices
“Crude oil has cooled down to 96$/barrel, and many are cheering this as the cue for an easing in inflation. Similarly, metal prices are low, bringing cheer to commodity consumers, but given the inflationary environment, you never know when the prices will start flaring up again. So commodity prices will be a crucial trigger to watch for,” said Sonam Srivastava.
FII’s
FIIs seem to have renewed their buying interest in India as they turned net buyers on a weekly basis for the first time after several months, purchasing shares worth more than Rs 4,000 crore in the week ended July 22. As a result, their net selling for the month reduced significantly to Rs 6,400 crore from Rs 10,000 crore for July.
The fall in dollar index, stabilised oil prices, decline in other commodity prices and reasonable valuations after recent market decline may be a few reasons for sentiment revival at FII desk. Their flow will be closely watched in coming days as Fed is set to announce its interest rate decision next week.
Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “It will be interesting to see FIIs’ behavior because, after a long time, they become a net buyer for the week.”
Domestic institutional investors (DIIs) remained net buyers during the passing week, buying shares worth Rs 940 crore, taking the total monthly inflow to Rs 8,300 crore in July which completely compensated FII outflow.
Nifty Technical Outlook
“Technically, the market is in strong bullish momentum however 16,800 is an immediate hurdle for the Nifty then 200-DMA around 17,000 will be the next critical hurdle therefore 16,800-17,000 zone will be a sacrosanct supply zone where we can expect some profit booking however a decisive move above 17,000, may lead to a strong rally in the market. On the downside, 100-DMA around 16,500 will be an immediate support level then 16340 will be the next critical support level,” Meena said.
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