Week Ahead: Inflation data, Q1FY25 Results, Budget updates, global cues among key market triggers this week
Indian stock market opened July on a spectacular note and achieved its longest winning streak since December 2023 amid the relentless bullish rally powered by the return of foreign funds and investor sentiments stabilising over Modi 3.0 coming to power. Bulls seem to have tightened their grip on Indian markets ahead of Union Budget 2024, which will be unveiled later this month.
In the second week of July, investors will keenly eye any Union Budget-related or government policy announcements as they may result in stock-specific action. The first set of April-June quarter results for fiscal 2024-25 (Q1FY25), domestic and global macroeconomic data, corporate announcements, foreign fund inflow, crude oil prices, and global cues will drive market movement this week.
Domestic equity benchmarks Sensex and Nifty 50 hit new lifetime highs last week supported by favorable global cues and rotational buying in leading sectors. The 30-share BSE benchmark achieving the historic 80,000-mark in its fastest-ever 10,000-point bull run covered in a record 58 market sessions.
India’s blue-chip Nifty 50 notched another record closing high in the previous session and chalked up its fifth straight week of gains, its longest such streak this year. Key sectors such as IT, pharma, and energy led the gains. Broader indices outperformed the benchmarks, posting gains of 2.4 per cent to 3.4 per cent.
‘’The recent indications of a potential rate cut by the US Federal Reserve, a rebound in foreign inflows, and a strong rally by private large-cap banking stocks have powered the Nifty 50 to extend its bullish streak. The resurgence in IT stocks has also supported the rally,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
The NSE Nifty 50 rose 0.09 per cent on the day to end at 24,323.85 as gains in energy stocks helped it notch a record closing high for the fourth time this week. The S&P BSE Sensex settled 0.07 per cent lower at 79,996.6 points, but still managed to mirror both the Nifty’s 1.2 per cent rise this week and a fifth consecutive week of gains.
“The domestic market maintained its upward momentum, bolstered by the progressing monsoon and anticipation of the upcoming Union Budget. Globally, a reduction in US PCE inflation has raised hopes for a FED rate cut in September. Lower US inflationary pressure and a significant drop in the US 10-year bond yield led to outperformance in defensive sectors like IT and pharma,” said Vinod Nair, Head of Research, Geojit Financial Services.
In the coming week, primary markets will witness some action as few new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track corporate results, Budget-related updates, and macroeconomic data.
‘’Any disappointing outcomes could potentially dampen the ongoing market rally in the short term”, added Nair. Overall, market analysts expect markets to consolidate at a higher zone, but the tone is likely to remain positive. Nifty 50 finds support at 24,100, however, a breakout above 24,500 could signal the next bullish phase. Experts advise traders to concentrate on stock selection, keeping in mind the potential for increased volatility.
Here are the key triggers for stock markets in the coming week:
Q1 Results, Budget 2024 Updates
Investors will be busy analyzing corporate earnings in the coming week as the first batch of Q1FY25 results are set to be released. IT majors Tata Consultancy Services (TCS) and HCL Technologies will kick off the Q1 results season from July 11 and 12. Some of the major companies reporting their Q1FY25 results in the coming week are: Delta Corp, Tata Elxsi, TCS, Nelco, HCL Tech, IREDA, and others.
As the market enters the earnings season, starting with IT bellwether TCS, expectations are optimistic for better results. Investors will closely watch management commentary for insights into the sector’s outlook,” said Geojits’ Vinod Nair.
Finance Minister Nirmala Sitharaman will present the highly anticipated Modi 3.0’s first Union Budget on July 23, 2024. President Droupadi Murmu approved a proposal on Saturday to summon both houses of Parliament between July 22 and August 12 for the Budget session. This will be the first budget presented by the PM Modi-led government since it was re-elected for a record third term in June.
‘’India’s union budget in July is a key event, with hopes pinned on growth-oriented policies and the development of the monsoon season, which will also be significant points of interest for investors and traders,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.
Domestic macroeconomic data
Domestically, India’s economic calendar is also marked with key releases. On July 12, 2024, both India’s industrial production data and inflation rate data will be unveiled. These figures are crucial indicators of the country’s economic health and can likely influence market sentiment and policy decisions.
1 new IPO, 5 listings to hit D-Street
No new mainboard IPOs will open for subscription this week, according to stock exchange data so far. Sahaj Solar IPO in the SME segment will open for bidding on July 11. Among the ongoing issues, Ambey Laboratories IPO will close on July 8, Effwa Infra and Research IPO and Ganesh Green Bharat IPO will close on July 9.
Among listings, shares of Emcure Pharmaceuticals and Bansal Wire Ltd will debut on stock exchanges BSE, NSE on July 10. Additionally, shares of Ambey Laboratories will get listed on NSE SME on July 11. Shares of Effwa Infra and Research and Ganesh Green Bharat will debut on NSE SME on July 12.
FII Activity
Foreign institutional investors (FIIs) extended their buying in this week, as they bought equities worth of ₹6,875 crore, while domestic institutional investors (DII) sold equities worth ₹385 crore. Foreign portfolio investors (FPIs) snapped their two-month selling streak and turned net buyers in June after stability returned to Indian markets with a fall in the ‘VIX’ volatility index. FPIs had halted their buying streak with the onset of the new fiscal.
FPIs invested ₹7,962 crore worth of Indian equities and the net investment stood at ₹14,128 crore as of July 5, taking into account debt, hybrid, debt-VRR, and equities. In June, FPIs invested ₹26,565 crore in Indian equities and the debt inflows stood at ₹14,955 crore, according to the National Securities Depository Ltd (NSDL) data. The total investment in June was ₹41,757 crore.
‘’FIIs turned net cash buyer to the tune of Rs. 5,633.33 crore, to date in July’24. Markets remained optimistic about strong government support for the economy, especially for the manufacturing sector, in the upcoming Budget. Market optimism continued to extend, with IT services finding flavor ahead of the Q1FY25 earnings season. FPI flows are expected to remain volatile,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.
Global Cues
Analysts said that the robust performance of US markets, will also be closely watched. The upcoming week will be pivotal, with significant data from China, Germany, and the US. The US inflation report on Thursday will be the central focus, potentially influencing Fed rate decisions and market sentiment. Traders should prepare for heightened volatility, particularly around key data releases.
Also Read: Budget 2024: L&T to Oil India, D-Street expert suggest four stocks ahead of Modi 3.0’s first Union Budget
From a global macroeconomic perspective, most market analysts believe that a weakening US labor market and economic slowdown could lead the Federal Reserve to consider cutting rates in September. US Federal Reserve Chair Powell’s testimony is scheduled for July 9, 2024. UK GDP data, US core CPI inflation, initial jobless claims, US PPI data will also guide market sentiments.
‘’Market expectations for two US Federal Reserve rate cuts this year remain unchanged. Despite the Fed’s new forecasts for monetary policy, including an interest rate cut in 2024, markets anticipate the first cut in September and another in November,” said Alex Volkov, Market Analyst at VT Markets.
The next Fed meeting is scheduled for the end of this month. US Fed Chairman Jerome Powell has emphasized that the decision on interest rates will depend on the incoming macroeconomic data and inflation trends.
Oil Prices
International crude oil prices hit their two-month high peak last week led by low US oil inventories, However, prices snapped their weekly winning streak and settled lower in the previous session after ceasefire discussions in the Middle East (Gaza) outweighed the strong summer fuel demand and the possible supply disruptions arising from the ongoing Gulf of Mexico hurricanes.
Brent crude futures settled down 89 cents, or 1.02 per cent lower, to $86.54 a barrel, after reaching their highest since April earlier in the session. US West Texas Intermediate (WTI) crude futures settled at $83.16 a barrel, down 72 cents, or 0.9 per cent. For the week, Brent rose 0.4 per cent, while WTI futures posted a 2.1 per cent rise, according to news agency Reuters.
Corporate Action
The buzzing week ahead is brimming with corporate action as stocks of several major companies and banks will trade ex-dividend, ex-split, and ex-bonus. Petronet LNG, JSW Steel, Ujjivan Small Finance Bank, AU Small Finance Bank, DCM Shriram, Sun Pharmaceutical, Indian Oil Corp (IOC), Axis Bank, among others will trade ex-divided by July 12. Raymond will undergo a spinoff. Check full list here
Technical View
Consolidation is expected in the index after recent gains, with strong support seen around 23,700- 24,000. A clear breakout above 24,500 could signal the next bullish phase. According to Ajit Mishra – SVP, Research, Religare Broking Ltd, investors are advised to focus on selective stock picking, favoring sectors like energy, FMCG, and pharma for long positions, and staying selective in others.
Given the continued outperformance of broader indices, traders should adopt a disciplined approach, preferring fundamentally sound stocks and having exit strategies in place. Nifty is showing a smooth vertical ride, and there are no signs of weakness, according to analysts.
According to Swastika Investmarts’ Pravesh Gour, there are some momentum indicators that signal overbought territory and 24,300–24,500 is an immediate resistance zone. Above this, 24,725–25,000 are the next target levels.
On the upside, the index encounters strong resistance near 24,400, close to its historical peak. A close above 24,450 may push the Nifty towards 24,600 levels. Sustaining above 24,250 is crucial for further gains towards 24,500 and 24,600 levels, according to Arvinder Singh Nanda of Master Capital Services.
Additionally, the Bank Nifty index recently broke out of a rising channel pattern two weeks ago and has since displayed consecutive bullish weekly candles, maintaining its position comfortably above the current breakout level.
On the upside, the index encounters strong resistance near 53,200, close to its historical peak, while 52,000 will act as an immediate support zone. A close above 53,200 could ignite further buying momentum, potentially pushing the index towards the significant resistance level of 53,800, according to Nanda.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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