Q1 results, IPO action among 10 factors that will steer D-Street this week

While the Nifty managed to hit the 25K mark, the weekly trade was largely range-bound, with the 50-stock index ending the week with a 0.47% decline, dragged down by fears of a US economic slowdown and Japan’s rate hike. When markets resume trading on Monday, a host of important domestic and global events lined up during the week are likely to impact them.

On Friday, Nifty ended with a decline of 1.2%.

Commenting on the current market trends, Osho Krishan, Senior Analyst – Technical & Derivatives at Angel One said that he sees a more balanced market sentiment after a sustained period of bullish dominance, reflecting a potential sense of exhaustion following the recent rally.

He advises investors to implement proper risk management strategies at current levels. In his view, thematic trends will likely continue to strongly influence the market. “Day traders can benefit from identifying and addressing these trends, as they offer ample opportunities for outperformance. Simultaneously, it is essential to watch global markets as they are expected to set the initial tone for our domestic market,” Krishan said.

Factors that are likely to impact movement when markets open this week:

1) US Markets

Global cues are expected to remain a dominant force, particularly those coming from the US. On Friday, US markets plunged after weak jobs data was published. Additionally, less optimistic earnings reports from top companies also dented sentiment on Wall Street.

While the Dow 30 settled at 39,737.30, down by 610.71 points or 1.51%, the S&P 500 closed at 5,346.56, lower by 100.12 points or 1.84%. The Nasdaq Composite finished at 16,776.20, down by 417.98 points or 2.43%.

2) Q1 earnings

The Street will be reacting to the earnings reports of major companies when markets resume trading on Monday. Among these are the State Bank of India (SBI), Divi’s Laboratories, Titan Company, and Britannia Industries. While SBI and Divi’s announced their earnings on Saturday, Titan and Britannia released their reports after market hours on Friday.Moreover, 922 BSE-listed companies are scheduled to announce their April-June quarter earnings this week. Among them are Bharti Airtel, Tata Power, TVS Motor Company, Vedanta, Dr. Lal Path Labs, Eicher Motors, and Honasa Consumer.

When Indian markets open on Monday, they will take cues from the US markets’ closing on Friday. Additionally, they will track movements in GIFT Nifty futures, which serve as an early indicator of the Nifty50’s direction.

3) Rupee Vs Dollar

The rupee ended 1 paisa higher at 83.72 against the US dollar in range-bound trading on Friday. Gains from a weaker American currency were offset by a significant sell-off in domestic equity markets. The local currency strengthened slightly due to a sharp decline in the dollar following recent US data that showed slower manufacturing growth in the world’s largest economy, according to forex traders.

On Thursday, the rupee declined 5 paise to settle at 83.73 against the US dollar.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said a slight decline in the US dollar amid disappointing economic data from the US may prevent a sharp fall in the rupee. Any fresh intervention by the RBI may also support the rupee.

“Traders may take cues from US non-farm payrolls data which is expected to be weaker than the previous month’s reading. USD-INR spot price is expected to trade in a range of Rs 83.50 to Rs 84,” Choudhary added.

4) Corporate Action

August 5, Monday, will be the ex-date and record date for dividends from Alembic, Gandhi Special Tubes, and Andhra Paper. It will also be the ex-date and record date for Welspun Living’s buyback.

August 5 will be the ex-date for dividends from Linde India, Britannia, Berger Paints, Hercules Hoists, and Chambal Fertilizers & Chemicals. The record date for all these companies will be July 6, Tuesday.

5) Technical Factors

For next week’s strategy and key levels to watch, Tejas Shah, Technical Research Analyst at JM Financial & BlinkX, noted that the Nifty is facing strong resistance around the psychological level of 25,000 in the short term. He believes the index could outperform further only if it decisively closes above this resistance level; otherwise, consolidation is likely to continue within the range of 24,500 to 25,000.

Support for the index is currently seen at 24,700 and between 24,450-500 levels, while on the upside, immediate psychological resistance for the Nifty is at 25,000. The next significant resistance is at the 25,250-300 range, Shah noted. Overall, it will be interesting to see if follow-up selling occurs this week, he added.

6) FII/DII Action

On Friday, foreign institutional investors (FIIs) were net sellers, with a net outflow of Rs 3,310 crore, while domestic institutional investors were net buyers, with a net inflow of Rs 2,965.94 crore.

The performance of domestic and foreign investors will influence the movement in the domestic stock markets.

7) IPO Action

Following a busy week of IPOs, the primary market is poised to continue its momentum with three new public offers scheduled for next week. Unicommerce and Firstcry will be launching in the mainboard segment, while Aesthetik Engineers will be the sole SME IPO.

In addition to the above, the Street will also witness 12 listings, including the much-anticipated debut of Ola Electric.

Also Read: IPO Calendar: Primary market gains momentum with 3 new issues, 12 listings on the horizon next week

8) Crude Oil

Oil prices remain crucial for markets due to their impact on inflation and the rate trajectories of global central banks, including India’s. On Friday, crude oil prices ended lower, with US WTI oil contracts trading at $74.14, down by $2.17 or 2.84%. Brent oil futures were hovering near $76.81, lower by $1.96 or 2.46%.

On the MCX, July Crude Oil futures were trading at Rs 6,130 per barrel, down by Rs 306 or 4.75%.

Higher crude oil prices are not favorable for equity markets, as they can exacerbate inflation fears.

9) Bond Yields

Indian government bond yields ended lower on Friday, with the benchmark 10-year bond yield reaching a more-than-two-year low as US bond yields continued to decline.

The benchmark 10-year yield settled at 6.8945%, its lowest level since March 31, 2022, compared to its previous close of 6.9166%.

The benchmark yield ended nearly five basis points lower this week. US yields plunged on Thursday, with the 10-year yield hitting a fresh six-month low and sliding below 4%. It further declined to 3.93% during Asian hours.

US yields fell amid growing concerns about the country’s economy. A surprise slump in manufacturing data sparked worries that the Federal Reserve might be falling behind on rate cuts, complicating their goal of achieving a soft landing.

Earlier this week, Fed Chair Jerome Powell noted that price pressures were broadly easing and mentioned that a “rate cut could be on the table” for the September meeting.

10) Global Macros

This week, a slew of important economic data will be published in the US, including the S&P Global Composite PMI (July), S&P Global Services PMI (July), CB Employment Trends Index (July), and ISM Non-Manufacturing Business Activity (July).

In the Eurozone, retail sales data for June will be released. In the UK, the S&P Global / CIPS UK Construction PMI (July) and Halifax House Price Index (MoM) (July) will be announced.

China will release its imports/exports data along with trade balance figures for July.

(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 The Economic Times)