Week Ahead: Earnings, RBI policy among 10 factors that could impact the market

Uttaresh Venkateshwaran

Moneycontrol News

The Indian market had a strong trading week, with the Nifty and Sensex surging to fresh record highs, and the Nifty closing above 10,000 for most of the sessions. For the week, the Sensex and Nifty gained 1 percent, each.

On the week’s last day of trade, the Street ended lower albeit recouping losses in the last hour of trade. The Nifty closed the first day of August series above the 10,000-mark led by HDFC and Infosys.

The 30-share BSE Sensex also cut losses by more than 200 points, down 73.42 points to close at 32,309.88 due to selling pressure in private banks, pharma and infra stocks. The 50-share NSE Nifty was down 6.05 points at 10,014.50 after hitting an intraday low of 9,944.50.

The broader markets outperformed benchmarks despite weak breadth, with the BSE Midcap index up 0.5 percent. About 1,388 shares declined against 1,248 advancing shares on the BSE.

The week ahead is action-packed with several domestic and global events lined up. India’s central bank will be meeting later this week to announce the outcome of the monetary policy committee’s meeting. Additionally, data on purchasing managers’ index for manufacturing and services would out, and could set the tone for the market.

Over 300 companies will be announcing their results during the week, which will have a bearing on D-Street.

On the global front, the market could watch out for geopolitical tensions due to North Korean missile launches along with global economic data as well. Here are 10 factors that could set the course for D-Street in the coming week.

MPC meet outcome

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will announce the outcome of its meeting on August 2. Experts are largely anticipating an interest rate cut due to falling consumer price inflation. If a rate cut does happen, it could boost the market sentiment and drive it higher as a cut is usually viewed as a step to boost economic growth. A status quo, though, could have the reverse effect.

373 BSE companies to declare results

The Street will watch for cues from the earnings of nearly 373 companies between July 30 and August 5. Earnings highlight the real, on-ground growth and therefore, any major gains or disappointments from these could move the market.

Among the companies, the major ones include Container Corporation, Godrej Consumer, Hexaware, InterGlobe Aviation, Reliance Power, Music Broadcast, Sintex Industries, Reliance Power, Torrent Power, Torrent Pharma, Tech Mahindra, Emami, Voltas, Ceat, Tejas Networks, Titan, Mahindra and Mahindra, Marico and Edelweiss Financial Services, among others.

Two new IPOs to hit the market

The upcoming week will also see two companies hitting the Street with their initial public offerings (IPOs) – Cochin Shipyard and Security and Intelligence Services (India) Limited.

Brokerages have largely recommended subscribing to Cochin Shipyard. In case of the latter, they highlighted the leadership position in the businesses and presence at a global level.

The Street could watch out for cues from these IPOs and it would also help in knowing the investors’ appetite for the same. Previously, experts had highlighted that with a flurry of IPOs lined up in the recent past, there is a chance the investors could be experiencing fatigue.

Stocks in Focus

The Street could react to developments around several corporates over the weekend and that could also have a bearing on the indices. ICICI Prudential could see movements as the insurance regulator directed the company to take over the life insurance portfolio of Sahara Life. ILFS, meanwhile, won the bid at Rs 4,849 crore for Zojila tunnel project, which connects Srinagar and Leh-Ladakh.

Additionally, Lupin could see some strong moves on the back of a no-observation inspection by the US FDA at its Pithampur unit. HDFC too could be in focus due to its 9.57 percent stake sale reports in HDFC Life IPO. Simultaneously, Marico could be in focus after its South Africa unit acquired the business if ISOPLUS, a hair styling brand for Rs 36 crore.

Corporate Action

Tata Chemicals, Nilkamal, Adani Ports, Adani Enterprises, Eicher Motors, Century Ply, Ambuja Cements, Page Industries, Nestle India, HCL Technologies, Thyrocare, Quick Heal Tech, Tata Global will be in focus as their annual general meetings and dividend announcements are likely in this week. Atlas Cycles, among others, will be discussing a stock split issue on August 4. Meanwhile, Jayant Agro Organics will meet to discuss a bonus issue later this week.

Monsoon progress

Much of the rally in the market in the previous months have been on the back of strong monsoon forecast. The government’s weather department, in a report for July 27, said that the country’s rainfall has been 5 percent above long period average, which can be seen as a positive development. However, the Street could also watch out for forecast going forward.

Macro Data

The Street will watch out for crucial macro data that will be declared later this week. The Nikkei manufacturing PMI data will be announced on Tuesday while the Services PMI data will be announced on Thursday. Additionally, the projections by the central bank on inflation trajectory, among others could set the tone for the market going forward.

Domestic tensions

It is likely that the Street could take a note of unsteady diplomatic relations of India with other nations. For instance, the meeting of India’s National Security Advisor Ajit Doval with that of Chinese President Xi Jinping has reportedly not shown any progress in the issue of standoff with Sikkim.

Additionally, the developments around Pakistan’s ex-Prime Minister Nawaz Sharif’s resignation in the Panama Papers scandal could cast a cloud over Indo-Pak relations as well.

Global cues

Global tensions on the back a fresh missile launch by North Korea, which may have landed within 230 miles of Japan’s coast could escalate volatility in the market. Further, it also said that the entire continental US coast could be struck.

Additionally, the market will watch out for economic data from several nations. For instance, China’s manufacturing and non-manufacturing PMI for July, Japan’s industrial production, housing, inflation for the Euro zone, US car sales, and unemployment rate, among others, will be declared during the week.

Rupee and bonds

The Indian currency has witnessed a strong week, and boosted the demand for the country’s bonds. “It is offering some of the best inflation-adjusted returns in Asia as the structural story for India remains strong. Foreign buyers have almost exhausted their quota in debt with net purchases of $21 billion in 2017 after net sales of $6 billion in 2016…long positions in the rupee are the highest among major Asian currencies,” said Vijay Singhania, Founder-Director, Trade Smart Online.

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