Stock market this week: After strong global cues, short covering by FIIs and the rally in banking stocks on Dalal Street, the Indian equity market ended in positive territory for the sixth consecutive day. The Nifty 50 index gained 4.17 percent while BSE Sensex shot up 4.30 percent over the past week. After a long selling spree, FIIs remained net buyers in four out of five sessions last week.
“During the past week we did not expect any one-way movement in the market and expected the rally to be halted near the 16,450 level. However, bulls in the stock markets eased over the week and we saw a move of over 4 percent in the index’s NIFTY spot. This was mainly due to positive global cues and short covering by the FIIs in the index futures,” said Mehul Kothari, AVP – Technical Research at Anand Rathi.
“This week has been great for the markets as they have advanced in all 5 sessions. Over the past month, mid-caps and small-caps are up over 10 percent. FMCG and autos have rallied on the back of cooling commodity prices, and there are early signs of a revival in rural demand. But next week might not be all positive as the US Fed is set to make policy decisions next week and another rate hike could spook markets,” said Sonam Srivastava, founder of Wright Research.
Here we list the top 5 triggers that could impact Indian equity markets this week:
1]Federal Reserve Meeting: “Due to the Fed’s dovish stance, the market is expecting a big announcement of a rate hike from the Fed’s monetary policy meeting. This is likely to set the tone for future financial markets as it could trigger FII selling again because US bond yields are expected to attract more money than the stock market in such a scenario,” said Anuj Gupta, Vice President – Research at IIFL Securities. He also said that the dollar index has eased over the past week and the US Federal Reserve’s interest rate hike could fuel demand for the US dollar again as an “investor’s have,” leading to a sharp rise in the US dollar (USD). against major currencies including Indian National Rupee (INR).
2]US Second Quarter GDP data: “The Gross Domestic Product (GDP) figures for the second quarter of the USA are due on July 28, 2022 and the whole world is eagerly awaiting this release. This data aims to provide an ideal picture of the US economy and set the tone for global stock markets, including Dalal Street. Positive Q2 GDP numbers could trigger a rally on Nasdaq closely followed by Indian IT stocks. With Nasdaq tracking US jobs data and FDP numbers, any positive announcement from the US government on the GDP front could trigger a trend reversal in Indian IT stocks,” said IIFL Securities’ Anuj Gupta.
3] Nasdaq Index: “One must remain vigilant on the results of 5 major Nasdaq-listed technology companies – Microsoft, Google, Meta Platforms, Apple and Amazon. These companies will report quarterly earnings next week. An announcement of positive quarterly earnings by these tech giants could extend the Nasdaq rally that started last week. Apart from that, Nasdaq follows US jobs and GDP data and US GDP for the second quarter comes next week on July 28th. So Indian bulls waiting for a trend reversal in Indian IT stocks are advised to stick to these triggers related to the Nasdaq index,” said Anuj Gupta.
4]Company results: “Next week we will see more than 200 companies release their earnings. Among them are, among many other prominent names, HDFC, TATAMOTORS, ITC, LT, ASIAN PAINT and BAJFINANCE. The numbers released as well as the management commentary will be critical to the direction of the market,” said Sonam Srivastava.
5]Commodity Prices: “Crude oil has cooled to $96/barrel and many are hailing this as a sign of a slowdown in inflation. Likewise, metal prices are low, which is cheering commodity consumers, but given the inflationary environment, you never know when prices will flare up again. Therefore, commodity prices will be a key trigger to watch for,” said Sonam Srivastava.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms and not Mint.
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