Stock Market This Week: RBI Meet, Auto Sales, Q1 Earnings, Other Factors to Watch Out For

Markets this week: The domestic equity market continued to remain in flavour on the back of favourable global cues, which lifted the indices higher. Sensex hit the 57,500 mark during the week, with Nifty50 settling over the 17,150 level. This week, the announcement of macroeconomic data, quarterly earnings, RBI interest rate decision and foreign funds movement are the major factors that will guide the trading activity in the equity market, analysts said.

Other factors that would influence trading are global market trends, movement of the rupee, and crude oil, they added.

“This week marks the beginning of the new month so participants will be eyeing crucial data viz. auto sales and PMI numbers for cues. The highlight would be the MPC (Monetary Policy Committee) meet after the recent Fed policy and its outcome which is scheduled for August 5,” said Ajit Mishra, VP – Research, Religare Broking Ltd.

RBI MPC Meeting

The key event to watch out for next week would be the Reserve Bank of India (RBI) monetary policy scheduled from August 3 to 5. Most experts expect the rate hike in the range of 25-50 basis points as the retail inflation is still above the RBI’s target range of 2-6 percent, but the commentary will be key to watch given falling commodity prices and normal monsoon, and action by global central banks.

US Job Data

US Non-farm payrolls and employment data would provide cues about the health of the jobs market in the US and guide the Fed’s monetary policy path ahead. “US job data is an important trigger as US markets closely follows US GDP and US job data. As US GDP numbers estimated this week have been disappointing. If US job data also comes disappointing then it would put dollar index under immense pressure leading to sharp recovery in national currency and the market morale. So, one needs to remain vigilant about the US job data coming next week,” said Anuj Gupta, Vice President — Research at IIFL Securities.

Corporate Earnings

More than 560 companies will release their quarterly earnings in the coming week including important names like ITC, State Bank of India, UPL, Lupin, Britannia Industries, GAIL India, HPCL, Mahindra & Mahindra, and Titan Company.

All Adani Group companies (Adani Enterprises, Adani Power, Adani Transmission, Adani Green Energy, Adani Wilmar, and Adani Total Gas), and new age tech companies One 97 Communications, FSN E-Commerce Ventures, and Zomato will also announce their quarterly earnings.

Auto Sales

Monthly sales numbers for July will be announced by auto companies next week so Tata Motors, Maruti Suzuki, TVS Motor, Bajaj Auto, Escorts, Mahindra & Mahindra, Ashok Leyland, Eicher Motors, Hero MotoCorp, etc will be in focus.

Passenger vehicle sales numbers are likely to be good given strong demand and improving chip availability while commercial vehicle sales are also expected to be good on a yearly basis, though there could be some seasonal impact on month-on-month numbers due to monsoon. In case of two-wheelers, likely muted demand may impact both yearly and sequential sales data while tractor sales may see seasonal impact, experts said.

DII FII Data

“Though FIIs have remained net sellers in the month of July, they are signaling buying interest. If dollar index and bond yield continue to go down, FIIs are expected to stop selling and in that case Indian stocks may witness sharp upside as DIIs are already pumping money in the markets,” said Anuj Gupta of IIFL Securities.

Technical View

The Nifty closing above the psychological 17,000 mark as well as above the 200 day simple moving average (17,033) with continuing sharp uptrend for the third session raised confidence among bulls at Dalal Street. Now the Street is eyeing 17,500 as the next crucial resistance followed by 17,800-18,000 hurdles, but before that, given the consistent run-up in the last few days, some profit booking can’t be ruled out with support at 16,950-16,800 levels, experts said.

The Nifty50 has formed a bullish candle on daily and weekly charts, while there was a bullish engulfing pattern on the monthly scale.

“A long bull candle was formed on the weekly chart, which is back to back for the second weeks. This market action signals an increasing strength of upside momentum in the market after upside breakout, as per smaller and larger timeframe charts,” Nagaraj Shetti, technical research analyst at HDFC Securities, said.

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