Domestic frontline indices Sensex and Nifty settled at their fresh record closing highs in the previous session over gains led by shares of IT majors, such as Infosys and TCS. Positive global cues, amid expectations that the US Federal Reserve may pause rate hikes after July, also gave a fillip to domestic Market sentiment last week. IT majors Tata Consultancy Services (TCS) and HCL Technologies kickstarted the Q1FY24 earnings season on July 12, reporting mixed-to-muted results. 

Sustained foreign capital inflow and the weakness of the US dollar also kept the market high. The dollar fell to a fresh 15-month low against major peers on Friday and US Treasury yields traded near multi-week lows following the sharpest weekly drop in four months, according to news agency Reuters.

Sensex closed at 66,060.90, up 502 points, or 0.77 per cent – a fresh record closing high of the index. Shares of Infosys, TCS and HCL Tech ended as the top contributors to the gains in the Sensex index. The Nifty50 also hit its fresh all-time high of 19,595.35 in intraday trade and settled at its fresh record closing high of 19,564.50, up 151 points, or 0.78 per cent.

The market is teeming with positivity as expectations have grown stronger that the Fed will take a pause on rate hikes after lifting rates by 25 bps on July 26 as US inflation eased more than expected last month. On the domestic front, India’s consumer price index (CPI) inflation rose for the first time in five months to 4.81 per cent in June – pushed higher than expected due to a less supportive base and the onset of a surge in vegetable prices.

‘’The broader Indian market traded positively, reaching all-time high levels, on expectations of buoyant Q1 results, consistent FII inflows, decreasing wholesale prices, and low volatility. Among the sectors, Nifty Bank performed weaker as it started the earnings season on a low note. However, investors are eagerly awaiting more earnings reports in the coming week to determine their trading direction,” said Vinod Nair, Head of Research at Geojit Financial services.

Going forward, a busy week awaits the primary market with two public issues to be rolled out for bidding and four listings lined up for bourses. Q1 results lined up next week along with global cues will majorly guide market movement next week, according to analysts. Here are the key triggers for stock markets next week:

Q1 Earnings

Banks will account for the largest portion of earnings in the upcoming week as financial services make up over 40 per cent of the benchmark index. Few tech companies in the large, mid, and small-cap groups will also report earnings next week. Some of the prominent companies reporting their Q1FY24 results next week are: HDFC Bank, LTIMindtree, IndusInd Bank, ICICI Lombard General Insurance, L&T Technology, Bank of Maharashtra, Hindustan Unilever, Infosys, JSW Steel, HDFC Life Insurance, Ashok Leyland, Glenmark Life Sciences, UltraTech Cement, Ramkrishna Forgings, among others. 

2 IPOs, 4 new listings to hit D-Street

Netweb Technologies IPO: In the mainboard segment, computing solutions provider Netweb Technologies will open its initial public offering on July 17, with a price band of ₹475-500 per share. The issue will remain open till July 19, and consists of a fresh issue of shares worth ₹206 crore and an offer-for-sale of up to 85 lakh shares by its existing promoters and shareholders. At the upper band price, the company expects to raise ₹631 crore through the IPO.

Asarfi Hospital IPO: The second IPO in the coming week will be Asarfi Hospital, from the SME segment. The issue will also open on July 17 and close on July 19, with a price band of ₹51-52 per share. The Jharkhand-based healthcare facilities provider intends to raise ₹26.97 crore from the public issue of 51.8 lakh shares at the upper price band, comprising only fresh issue.

Among new listings, all four will be taking place in the SME segment, and no new ones in the mainboard segment.

Digital technology services company AccelerateBS India will be the first to debut next week on the BSE SME, on July 19 and polymer-based profiles maker Kaka Industries will make its debut on the BSE SME platform on July 20. Drone Destination and Ahasolar Technologies will also be listing next week on July 21, on the NSE SME Emerge and BSE SME platforms respectively.

FII inflow

Sustained inflow by foreign investors backed by positive global trends among the major drivers for the record highs scored by equity markets last week. Foreign institutional investors (FIIs) extended their buying-spree and invested more than ₹2,636 crore in Indian stocks on Friday. On the other hand, domestic institutional investors (DIIs) extended their selling with an outflow of nearly ₹772.5 crore. 

‘’The controlled inflation in the US has instilled optimism among investors that a 25-bps rate hike would be adequate to stabilise the US economy. This improved prospect has contributed to the strong buying of Indian IT stocks despite muted Q1 earnings. Furthermore, the broad-based rally in the domestic market was supported by India’s consecutive third month decrease in wholesale prices, along with the positive involvement of FIIs,” said Geojit’s Nair.
 

Oil Prices

Crude oil benchmarks recorded their their-straight weekly gain as the dollar strengthened and oil traders booked profits from a strong rally fueled by softer US inflation. Last week, oil had been on a record-gaining streak as prices hit nearly three-month highs. Global oil benchmark Brent hovered above the $80 per barrel-mark after US inflation data implied rate-hike cycle could be nearing an end in the world’s biggest economy.

Oil prices have now rallied by around 12 per cent in two weeks, primarily in response to supply cuts from top producers Saudi Arabia and Russia. Top producer Saudi Arabia had pledged to extend a production cut of 1 million bpd in August.

Analysts predict that the rally could resume next week as easing inflation, plans to refill the US strategic reserve, supply cuts and disruptions could support the crude oil market.
 

Corporate Action

Several companies will trade ex-dividend next week including DCM Shriram, Fortis Healthcare, Graphite India, HCL Tech, Novartis India, TCS, Abbott India, Tech Mahindra, Cipla, Blue Star, Dabur, among others. Thangamayil Jewellery, Anmol India, Leading Leasing Finance And Investment Company, will trade ex-bonus next week. Ashapuri Gold Ornament, Tejnaksh Healthcare, Square Four Projects India will trade ex-split next week, according to BSE data.
 

Technical View

The performance of the banking and IT pack would largely dictate the trend. A decisive close above 31,600 in the Nifty IT index and sustainability above 44,500 in the Nifty Bank would further fuel the momentum. The positive tone of the US market is also helping in keeping the upward bias and a breakout above 34,600 in the Dow Jones Industrial Average (DJIA) will further boost the sentiment, according to analysts.

‘’As Nify has ended a week-long consolidation phase, it now looks set to test 19,750 and eventually march toward a new milestone of 20,000. In case of a decline, 19,100-19,3000 would provide the cushion. Participants should align their positions accordingly while maintaining their focus on stock selection and risk management,” said Ajit Mishra, SVP – Technical Research, Religare Broking.

Updated: 16 Jul 2023, 06:35 AM IST