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HomeNewsGlobal NewsNext week's events on Dalal Street will be determined by corporate earnings,...

Next week’s events on Dalal Street will be determined by corporate earnings, a Fed meeting, bank stocks, and other events. July 24-28

Next week’s events

Next week’s events for the Indian market: foreign exchange reserves, infrastructure output, bank loan- deposit growth.etc

Despite Infosys’ poor full-year outlook and HUL’s quarterly earnings, the market rallied for a fourth week. Reliance Industries unlocking value, continuous foreign investor inflow, excellent domestic macroeconomic data, and bank purchasing in anticipation of good Q1 results kept sentiment buoyant throughout the week.

The main indices closed at weekly record highs, while the Nifty fell short of 20,000. The BSE Sensex rose nearly 600 points to 66,684, the Nifty50 rose 180 points to 19,745, the Nifty Midcap 100 gained 0.7 percent, and the Smallcap 100 gained 1.8 percent.

Banking, financial services, energy, infrastructure, oil and gas, and pharma companies boosted the market, but technology stocks sold down.

On Monday, the market will respond to Reliance Industries, ICICI Bank, and Kotak Mahindra Bank’s quarterly earnings reported Friday and Saturday. Experts expect modest correction ahead of the FOMC meeting and earnings season, but the trend remains bullish with bank support and significant FII flow. The monthly F&O expiry next week may also cause market volatility.

Fed Rate Determination

The July 26 US Federal Reserve interest rate decision will move markets. Most worldwide analysts expect the Fed to raise the Fed funds rate by 25 bps in July and then stop. As inflation remained above 2 percent and the labor market tightened, most Fed officials supported a rate move.

US inflation dipped to 3% in June from 4% a month earlier. Despite significant base effects, it fell below 4% for the first time in two years. Core inflation fell to 4.8%.

The core at 4.8 percent is still higher than the long-term average of 3.7 percent, but the war against inflation is mostly finished. Disinflation is entrenching. Sandip Bansal, Associate Director at ASK Investment Managers, suggested the Fed may rise once more and then pause.

On July 27 and 28, the European Central Bank and Bank of Japan will publish their interest rate decisions, and global markets will closely watch the first advance projections for US GDP growth for the April-June quarter of 2023 on July 27.

US Markets

Two of three US indices ended flat on Friday due to lackluster earnings. Dow 30 closed at 35,227.70, up 2.51 points or 0.01%, while S&P 500 up 1.47 points or 0.03% to 4,536.34. The Nasdaq Composite fell 30.50 points, or 0.22%, to 14,032.80.

Indian markets will follow the US market close on Monday. They will watch Dow Futures and GIFT Nifty futures on Monday. The latter predicts Nifty50 movements.

Global Macros

Monday’s US, UK, and EU S&P Global manufacturing services and composite PMI data. July 26 will see all major FOMC rate decisions. This week, the US will report GDP and unemployment. China Industrial Profits statistics on July 27.

India had no important economic event this week. The monsoon session of Parliament will likely consider 31 crucial laws.

Local Economic Data

On July 28, foreign exchange reserves, infrastructure output, and bank loan & deposit growth will be released.

After several months, foreign exchange topped $600 billion again. Foreign currency assets, the main component of forex reserves, rose $12.74 billion to $609.02 billion in the week ended July 14.

Q1 Results

This week features June quarter profits. Tata Steel, Bajaj Auto, Asian Paints, SBI Life Insurance Company, Tata Motors, Larsen & Toubro, Tata Consumer Products, Tech Mahindra, Dr Reddy’s Laboratories, Cipla, Axis Bank, Nestle India, and others will report Q1 earnings.

Coca-Cola, Boeing, Microsoft, Alphabet, Visa, Meta, Mastercard, P&G, Hermes, and AstraZeneca will report quarterly earnings.

Weekend earnings from ICICI Bank, Kotak Mahindra Bank, and Yes Bank will also affect markets.

Public issues looming

Five Rs 857 crore public issues and three listings will reach Dalal Street next week. On July 26, Noida-based Yatharth Hospital and Trauma Care Services launched its Rs 687 crore public offering at Rs 285-300 per share in the mainboard segment. Offer ends July 28.

Netweb Technologies India will launch on the bourses on July 27. Analysts said on anonymity that its grey market shares had a 75% premium above the estimated final issuance price of Rs 500 per share.

SME activity will be intense. The first IPO, Chennai-based Khazanchi Jewellers, will open for registration on July 24 at Rs 140 per share. The Rs 97-crore offer ends July 28.

On July 24, dyes maker Yasons Chemex Care will launch its Rs 20.57-crore IPO. Offer ends July 26.

Shri Techtex’ Rs 45-crore IPO will open for subscription July 26–28 with a price band of Rs 54–61 per share, while direct marketing solution provider Innovatus Entertainment Networks’ Rs 7.74 crore public issue will debut July 25. The sale closes on July 27 and costs Rs 50 per share.

Service Care debuted on the NSE SME on July 26 and Asarfi Hospital on the BSE SME on July 27.

FII DII Action

Monday markets will depend on FIIs and DIIs. Foreign institutional investors sold 1,998.77 crore of Indian shares on Friday. DIIs bought Rs 1,290.73 crore.

Oil prices

DXY will determine crude oil prices. Importers will worry inflation as a stronger dollar raises dollar-priced commodities.

Friday saw September US crude oil rise $1.42 to $77.07 a barrel. September Brent crude increased $1.43 to $81.07 a barrel. August wholesale gasoline jumped 6 cents to $2.80. August heating oil jumped 9 cents to $2.75 a gallon.Associated Press reported August natural gas declined 5 cents to $2.71 per 1,000 cubic feet.

August Crude oil futures on MCX closed at Rs 6,299 per BBl, up Rs 88 or 1.42% from Thursday’s close.

Tech view

Last Friday, the Nifty50 ended a six-day run with a bearish candlestick pattern and closed below the 5-day EMA (19,769). However, on the weekly scale, the index has formed bullish candlestick pattern with long upper shadow, indicating profit booking at higher levels, but continued higher highs formation for 17th straight session with holding 5-week EMA (19,359) and 10-day EMA (19,422) since April, which could be a crucial support area in case of severe correction.

On the weekly chart, Nifty created a bull candle with a lengthy upper shadow, indicating strong resistance at 20,000. “The immediate support of 10-day EMA is 19,650 levels and important 20-day EMA support is 19,422 levels,” stated HDFC Securities technical research analyst Nagaraj Shetti.

Thus, he expects a market rebound on an additional downturn. He stated 19,850-19,900 could be a strong resistance on the way up.

India VIX & F&O

Options data suggests that 19,600-19,500 may provide Nifty support in the near term, while 19,800-20,000 may be resistance.

Weekly Options data showed largest Call open interest at 19,900 strikes, followed by 19,800 and 20,000 strikes, with considerable Call writing at similar strikes in the same sequence. On the other hand, Put open interest is highest at 19,000, followed by 19,800 and 19,500, with Put writing at 19,600, 19,100, and 19,500.

“19,500 still remains a strong support for Nifty and the Index is likely to take support over here,” Hedged Founder & CEO Rahul Ghose said.

At 46,000, Bank Nifty saw significant Put writing. This level was defended all day Friday. “The writing in the 46,000 Put happened for the August series as well signifying that all is not lost and this is just a knee-jerk reaction. Rahul predicted a Nifty rebound next week if 44,600 holds.

Since June, volatility has increased but maintained in a range between 12.5 and 9.6. India VIX, the fear index, jumped 7.5 percent to 11.48 this week.

Crude oil

DXY will determine crude oil prices. Importers will worry inflation as a stronger dollar raises dollar-priced commodities.

Friday saw September US crude oil rise $1.42 to $77.07 a barrel. September Brent crude increased $1.43 to $81.07 a barrel. August wholesale gasoline jumped 6 cents to $2.80. August heating oil jumped 9 cents to $2.75 a gallon.Associated Press reported August natural gas declined 5 cents to $2.71 per 1,000 cubic feet.

August Crude oil futures on MCX closed at Rs 6,299 per BBl, up Rs 88 or 1.42% from Thursday’s close.

Gold

Gold dipped on Friday as the dollar index (DXY) rose above 101 to finish green. August Gold futures closed at Rs 59,298 per 10 gram, down Rs 254 or 0.43% on Thursday. September Silver futures fell Rs 483 or 0.64% to Rs 74,966.

Gold prices down $7 or 0.36% to $1,963.90 on the Comex, while silver futures fell $0.182 or 0.730% to $24.780.

Gold should follow DXY before the US Fed meeting.

Bond Yields

As debt sales increased supply, Indian government bond rates held unchanged on Friday, Reuters reported. Attention now turns to the US Federal Reserve’s policy announcement next week. The benchmark 7.26% 2033 bond yield closed at 7.0784% after closing at 7.0827%.

Weekly yield declined one basis point.

The yield grew cautiously as US yields rose. A state-run bank trader claimed other traders are also unwinding their bets before the Fed decision.

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