The stock markets are closed on Tuesday for Independence Day.
“As we approach a shortened trading week, several factors will influence market dynamics. macroeconomic indicators, rupee fluctuations, and FII activities will be pivotal in shaping market trends in the coming days,” said Santosh Meena, head of research, Swastika Investmart.
1) Macroeconomic Indicators
In the week ahead, the consumer price inflation for July will be released, and investors will closely track it, as it is widely expected to move back above the Reserve Bank of India’s 2-6% tolerance band in the backdrop of higher vegetable prices.
While releasing its monetary policy statement, the RBI projected July CPI inflation at 6.2%.
In the week ahead, the UK will release its CPI inflation for July, and the US Federal Reserve will release the minutes of its last policy meeting.
2) Q1 Earnings
We have reached the final leg of the earnings season. Among the big ones, ITC, Divi’s Laboratories, and Vodafone Idea are slated to release their quarterly earnings on Monday.
A bunch of smallcap companies will be releasing their earnings, including Career Points, Easy Trip Planners, Fiem Industries, Future Consumer, Globus Spirits, GMR Airports, Hindustan Copper, Jagran Prakashan, Meghmani Organics, PC Jeweller, and Wockhardt.
3) Global Markets
With the earnings season and RBI’s monetary policy behind, investors’ focus will move back to global markets for cues.
In the week gone by, while Indian equities gave negative returns, US markets were positive and in Europe and Asian markets, the trend was largely mixed.
“With the global economic mood getting challenging due to slackening Chinese demand, any weakness in global equities could trigger wild gyrations in local shares and result in FII flows turning choppy,” said Shrikant Chouhan, head of research (Retail), Kotak Securities.
4) Dollar Index
The movement in the dollar index will be closely tracked as it will determine the trading strategy of foreign institutional investors.
In the last week, the dollar index net gained 0.8%. So far in August, the index has gained 1.2% and this has somewhat triggered outflows from foreign investors.
5) FII Flows
After relentless buying for five months, FIIs turned net sellers in August. In August, FPIs sold stocks to the tune of Rs 7,543 crore.
“Strength in the dollar index and the US 10-year bond yield remaining well above 4 % is a short-term negative for FPI flows to emerging markets like India,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.
6) Crude Oil
Crude oil prices have been another party spoiler for the bulls on Dalal Street. Prices have rallied nearly 14% in the last 1 month.
Higher prices are detrimental to India as they will inflate the import bill and also push inflation higher. The RBI last week raised its inflation projection for the current fiscal year in view of the skyrocketing vegetable prices and firming up of crude oil prices.
7) IPO Watch
The ongoing public offer of TVS Supply Chain Solutions will be on investors’ radar. The issue which opened for subscription on August 10, will close on Monday. Until Friday, the issue was fully subscribed, with the retail portion seeing maximum traction.
Later in the week on August 18, the IPO of Pyramid Technoplast will open for subscription and most analysts have recommended applying for the issue.
Among SME issues, Shelter Pharma’s IPO, which opened for subscription on August 10, will close on Monday.
The coming week will see 3 public offers opening for subscription, and these are Shoora Designs, Crop Life Science, and Bondada Engineering.
8) Technical Indicators
For the third consecutive time, domestic equities clocked weekly losses, as profit-booking kicked in after the non-stop rally for five months.
However, technical analysts are unperturbed by the current correction and recommend adopting a “buy-on-dips” approach, as the longer uptrend remains intact.
“The index is currently trending up, forming a series of higher tops and bottoms, which indicates a sustained uptrend. As a result, any short-term price corrections should be viewed as buying opportunities,” Axis Securities said.
In the near term, any corrections towards 19,300-19,100 levels on Nifty 50 should be seen as a buying opportunity, as the index has the potential to extend its rally and test levels of 20,000-20,300 points, the brokerage said.
On Friday, Nifty 50 ended 0.6% down at 19428.30 points.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)