On Friday, Nifty ended with a decline of 1.1%.
The short-term trend of Nifty seems to have reversed from all-time highs, Nagaraj Shetti of HDFC Securities said. The formation of candle patterns as per daily and weekly charts indicate the possibility of more weakness in the market ahead, he warned.
βThe next lower supports to be watched are around 24,200 and 24,000 levels. Immediate resistance is at 24,850 levels,β he said.
Factors that are likely to impact movement when markets reopen this week:
Budget 2024
The D-Street will be having its eyes fixed on July 23, when Finance Minister Nirmala Sitharaman will be presenting her first full budget of the Narendra Modi-led NDA government. Specific sectors like defense, railway, and infrastructure may remain in focus.
Q1FY25 earnings
The Street will be reacting to the earnings of major companies when markets resume trading on Monday. Among them are Reliance Industries (RIL), HDFC Bank, Kotak Mahindra Bank and Yes Bank.
Moreover, 298 BSE-listed companies will announce their April-June quarter earnings this week. Among them will be, Bajaj Finance, Hindustan Unilever (HUL), Axis Bank, Bajaj Finserv, Larsen & Toubro (LT), SBI Life Insurance Company, Nestle, Cipla, IndusInd Bank, Dr Reddy’s Laboratories and ICICI Bank.
US Markets
US stocks closed lower, extending a slump that left Wall Street with its worst week since April. While the Dow 30 settled at 40,287.50, down by 377.49 or 0.93%, the S&P 500 closed at 5,505, higher by 39.59 points or 0.71%. The Nasdaq Composite finished at 17,726.90, up by 144.28 points or 0.81%.
When Indian markets reopen on Monday, they will take cues from the Friday closing of the US markets. They will also track movement in GIFT Nifty futures on Monday. The latter is an early indicator of movement in the Nifty50.
Rupee Vs Dollar
The rupee depreciated 7 paise to settle at its all-time low of 83.70 against the US dollar on Friday, weighed down by strong American currency and a muted trend in domestic equities. Forex traders said weak domestic markets and elevated oil prices pressured the rupee, however, likely Reserve Bank of India (RBI) intervention prevented a sharp fall in the domestic unit. At the interbank foreign exchange market, the local unit opened at 83.64 and touched an intra-day high of 83.60 and a low of 83.70 against the dollar during the trading session.
It finally settled at an all-time low level of 83.70 against the American currency, registering a loss of 7 paise from its previous close. On Thursday, the rupee depreciated 5 paise and settled at a historic low of 83.63 against the US dollar.
“We expect the rupee to trade with a slight negative bias on weak global markets and a strength in the US dollar. Weak Asian and European currencies may also weigh on the rupee,” Anuj Choudhary — Research Analyst at Sharekhan by BNP Paribas said.
5) Corporate Action
July 22, Monday will be the ex-date for Aditya Birla Money’s AGM, Happy Forgings AGM, and dividend and AGM of Tips Films and Chembond Chemicals. It will also be ex-date for the dividend of Chembond Chemicals. July 23 will be the record date for the AGM of Happy Forgings and the dividend of Chembond.
6) Technical Factors
Commenting on the technicals, Amol Athawale of Kotak Securities said that the current market texture is non-directional and volatile. Hence, level-based trading would be the ideal strategy for traders.
He sees 24,500-24,350 as a key support zone for bulls while 24,850-25000 as the resistance areas for traders. “However, below 24,350 the sentiment could change. Below the same, positional traders may prefer to exit from trading long positions. For Bank Nifty now, 25-day SMA (Simple Moving Average) and 51,750 are immediate support zones while 52,800 and 53,200 would be the immediate resistance areas for positional traders,” Athawale said.
7) FII / DII Action
On Friday, the foreign institutional investors (FIIs) were net buyers at Rs 1,506.12 crore while the domestic institutional investors were net sellers at Rs 461.56 crore.
The performance of domestic and foreign investors will have an impact on the way movement happens in the domestic stock markets.
8) IPO Action
The lull in the mainboard IPO will continue through the next week as no new issues are scheduled to open. However, about 8 companies are gearing up to launch their IPOs in the SME segment.
The SME IPOs that will open for subscription next week include RNFI Services, SAR Televenture, VVIP Infratech, VL Infraprojects, Manglam Infra and Engineering, Chetana Education, Aprameya Engineering and Clinitech Laboratory.
Also Read: IPO Calendar: 8 new issues, 8 listings to keep primary market buzzing next week
9) Crude Oil
Oil prices remain critical for markets with their impact on inflation and the rate trajectory of global central banks including India’s.
Crude oil prices ended lower on Friday with US WTI oil contracts trading at $80.25, down by $2.57 or 3.1% while Brent oil futures were hovering near $82.63, lower by $2.55 or 3%.
On the MCX, the July Crude Oil futures were trading at Rs 6,609 per BBL, down by Rs 237 or 3.46%.
Higher crude oil prices do not augur well for the equity markets, fuelling inflation fears.
10) Bond Yields
Indian government bond yields ended largely unchanged on Friday, with investors keenly awaiting the federal budget due next week, where the fiscal deficit and market borrowing numbers will be in focus. The benchmark 10-year yield ended at 6.9641%, following its previous close of 6.9674%. For the week, the yield dipped 2 basis points, after ending flat last week.
“The budget announcement will cement the borrowing figures and the path for fiscal restraint. This shall be vital for the government that is negotiating with the rating agencies for an upgrade,” Reuters reported quoting Deepak Bhayana, managing director and head of global markets, India at MUFG Bank.
Some market participants believe the government has room to cut borrowing by around 500 billion rupees ($5.98 billion) after strong revenue collections and a record surplus transfer from the central bank.
Nomura expects the gross borrowing to be kept unchanged from the interim budget, but says there could be a reduction in the Treasury bill issuance.
India sold Rs 20,000 crore of the benchmark bond on Friday, which was bought near prevailing rates.
11) Global Macros
S&P Global US Manufacturing PMI (Jul), Composite PMI and Services PMI data will be declared this week. New home sales numbers for June will also be declared. In the UK, S&P Global/CIPS UK Services PMI, S&P Global/CIPS UK Manufacturing PMI and S&P Global/CIPS UK Composite PMI will be announced.
In China, Loan Prime Rate 5Y (Jul) will be declared.
Inputs from agencies/Investing.com
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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