Domestic equity benchmarks Sensex and Nifty ended lower on Friday, July 28, extending losses into the second consecutive session, amid weak global cues. Sensex opened flat at 66,266.35 against the previous close of 66,266.82 but plunged 388 points to hit its intraday low of 65,878.65.

The index finally closed at 66,160.20, down 107 points, or 0.16 per Cent. Nifty50 closed at 19,646.05, down 14 points, or 0.07 per cent. Heavyweight HDFC Bank ended as the top drag on Sensex, followed by Infosys, TCS and Axis Bank.

However, mid and smallcaps outperformed the benchmark index. The BSE Midcap index closed 0.55 per cent higher at 30,159.82 after hitting its record high of 30,178.22. The Smallcap index rose 0.49 per cent to end at 34,548.46 after hitting its fresh record high of 34,577.99.

‘’Sectorially, it was mixed with major buying seen in realty (+1.8 per cent). Power stocks were in the limelight on the back of attractive valuations and huge investments in the sector. Overall, we expect sectoral rotation in the Market, while Nifty is likely to remain in the consolidation zone with the ongoing result season,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

For the week, Sensex slipped 0.8 per cent while the Nifty declined 0.5 per cent. The BSE Midcap index clocked a gain of 2.07 per cent this week while the Smallcap index rose 1.18 per cent. However, domestic markets had largely witnessed resilience last week till Wednesday, July 26, even though the sentiment was subdued due to selling pressure in IT stocks.

Going forward, a buzzing week awaits the primary market with five public issues to be rolled out for bidding and two new listings lined up for bourses. The market is brimming with various domestic and global macroeconomic indicators that are expected to sustain its momentum, according to analysts. The developments during the monsoon session of parliament will also be significant points of interest for investors and traders, they added.
 

Here are the key triggers for stock markets next week:

Q1 Earnings, Auto Sales Figures:

Investors will be busy analyzing corporate earnings in the coming week as several major Nifty 50 companies are going to announce their Q1FY24 results. However, markets will begin the week by reacting to Q1FY24 results of Marico, United Breweries, NTPC, IDFC First Bank, among others on Monday as these companies declared their quarterly results during the weekend or during post-market hours on Friday.

Some of the prominent companies reporting their Q1FY24 results in the coming week are: Adani Power, Powergrid, GAIL, Bharti Airtel Britannia, Eicher Motors, Sun Pharmaceuticals, Mahindra & Mahindra, Maruti Suzuki, Titan, State Bank of India, among others.
 

Manufacturing PMI Data:

From a macroeconomic perspective, market participants will be closely observing key events like the upcoming release of the US manufacturing Purchasing Manager’s Index (PMI) data, US services PMI data as well as US non-farm payrolls scheduled between August 1 and August 4. 

Back home, the PMI data for July will also be released in the coming week which will indicate the growth of India’s manufacturing sector. In June, the country’s manufacturing sector demonstrated significant growth, positioning itself as the second-fastest expansion of the year, as the PMI revealed a reading of 57.8, according to S&P Global.

‘’These indicators can provide valuable insights into the state of the global economy and may impact market sentiment. Additionally, institutional activity will also have a significant impact on market trends,” according to analysts at Swastika Investmart.

5 IPOs, 2 listings to hit D-Street:

In the coming week, five initial public offerings (IPO) and two new listings await the bourses in both main board and small- and medium-sized enterprise (SME) segments. These are as follows:

-SBFC Finance IPO will open for subscription on August 3, and close August 7. The company’s shares are likely to be listed on BSE and NSE on August 16.
-Concord Biotech IPO will open for subscription on August 4, and close on August 8. The company’s shares will be listed on BSE and NSE August 17.
-Oriana Power IPO will open for subscription on August 1, and close on August 3. The company’s shares will be listed on the NSE Emerge platform August 11.
-Vinsys IT IPO will open for subscription on August 1, and close on August 4. The company’s shares will be listed on the NSE Emerge platform August 14.
-Yudiz Solutions IPO: will open for subscription on August 4, and close on August 8. The company’s shares will be listed on the NSE Emerge platform August 17.

Additionally, dyes and paste-manufacturing company debut on the NSE SME on August 3, while event management firm Innovatus Entertainment will be listed on the BSE SME exchange August 4.

FII Inflow:

Foreign institutional investors (FII) purchased shares worth a net of ₹14,623.18 crore for the month up to July 28, while domestic institutional ivestors (DII) sold shares worth a net of ₹3,672.40 crore. The consistent buying pushed Sensex and Nifty to fresh record highs this month, with the Nifty index – at one point, just shy of scoring the 20,000-mark.

In July, Nifty rallied around five per cent mainly on foreign capital inflow and the momentum led by Q1FY24 results. Due to July F&O expiry and weak guidance from the IT sector, markets faced a sudden selling pressure, breaking its winning streak that was recorded earlier last week. 

This led to FIIs turning net sellers in the last two sessions (July 27 and July 28), offloading a total of ₹5,003.35 crore in Indian equities, snapping its consistent buying streak that helped sustained a record rally in Nifty this month.

Additionally, foreign portfolio investors (FPIs) bought ₹45,365 crore in Indian equities so far this month, which has been marginally lower than the total investment made in June 2023. According to NSDL data, FPIs infused ₹46,581 crore in Indian markets so far in July, taking into account debt, hybrid, debt-VRR, and equities, according to exchange data. 

Even though the FPI investment has been lower than June, they are on the path of recording the fifth monthly buying in the Indian market in a row. Analysts stay optimistic about resilience in markets and say that the recent dip indicates a healthy correction citing the pace of decline and intermediate buying across sectors.

‘’Regarding FII’s positions, they currently hold a long exposure of 54 per cent in index futures, signifying a neutral stance. The put-call ratio of 0.82 suggests an oversold zone, hinting at a possible bullish signal,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
 

Global Central Bank Policies:

Last week, the US Federal Reserve raised its benchmark lending rate to the highest level since 2001 to tackle above-target inflation, and signaled the possibility of further increases ahead. The quarter percentage-point rise lifts the overnight interest rate to a range between 5.25 per cent and 5.5 per cent, which is a record 22-year high peak level in the world’s biggest economy.

In less than a day’s gap, the European Central Bank (ECB) followed Fed’s footsteps, and hiked its key interest rate by another 25 basis points to 3.75 per cent -its highest level in 23 years. The ECB too kept its options open on whether more increases will be needed to bring down inflation against a worsening economic backdrop.

Analysts reckon that the last three rate revisions of US Fed did not impact the Indian markets, especially Nifty, but this rate hike might create a longing for safe-haven products. ‘’In the short term, interest rate hikes will cause a tight liquidity situation. But, keeping in mind the Indian economy’s robustness and demographic benefits, no major impact will be seen on foreign investment in India,” said Jayden Ong, Senior Market Analyst, APAC, Vantage.

As per media reports, the Bank of Japan has changed its approach to managing interest rates. They made their policy more flexible and relaxed their efforts to keep long-term interest rates low. After the US Fed and ECB, the focus now shifts to the Bank of England meeting next week.

Oil Prices:

Oil prices rose on Friday and notched a fifth straight week of gains as investors were optimistic that healthy demand and supply cuts will keep prices buoyant. Bolstered by supply cuts from the Organization of Petroleum Exporting Countries and its allies (OPEC+) announced earlier this month, both oil benchmarks gained nearly five per cent for the week – a fifth straight week of gains. The benchmarks are on track to gain over 13 per cent for the month.

Brent crude settled 75 cents higher to $84.99 a barrel, while US West Texas Intermediate (WTI) crude gained 49 cents to $80.58 a barrel. Last week, oil soared around two per cent higher, retreating Fed’s rate hike impact, with Brent crude topping the $84 per barrel-mark for the first time since April on tightening supply.

“We see the oil market undersupplied,” UBS analysts said in a report. “We retain a positive outlook and look for Brent to rise to $85–$90 over the coming months,” the analysts were quoted by news agency Reuters.

Corporate Action:

Shares of several companies including Larsen & Toubro (L&T), Maruti Suzuki, Exide Industries, United Breweries, Kotak Mahindra Bank, among many others will trade ex-dividend in the coming week, starting from Monday, August 31.

Also, shares of Kamdhenu Ventures and NINTech Systems will trade ex bonus next week, according to data on stock exchanges. Akshar Spintex Ltd will see a stock split from ₹10 to Re 1 on July 31.

Mindspace Business Parks REIT and Embassy Office Parks REIT will see an income distribution REIT on July 31 and August 3, respectively. POWERGRID Infrastructure Investment Trust and India Grid Trust will declare an income distribution (InvIT) on August 2 and August 3, respectively. Piramal Pharma Ltd will see a right issue of equity shares on the same day. 

Aarti Drugs will see a buy back of shares of August 4. Sarda Energy & Minerals Ltd will see a stock split from ₹10 to Re 1 on August 4. 

Technical View:

Markets ended a four-week long gaining streak and ended marginally lower, taking a breather after the recent surge. According to analysts, the tone was subdued from the beginning, however the key indices tried to regain some strength in the middle, but profit taking in final sessions trimmed the gains and pushed them into the red. 

‘’Apart from the earnings, we have been closely following the performance of global indices for cues and the prevailing buoyancy in the US markets gives us the comfort to hold the bullish view. However, we could see some volatility citing resistance around the 35800+ zone in Dow Jones Industrial Average (DJIA),” said Ajit Mishra, SVP- Technical Research, Religare Broking.

‘’Nifty has almost retraced to the upper band of the critical support zone i.e. 19,300-19,500 and it may see further consolidation before resuming the trend. On the higher side, it could face a hurdle around the 19,850-20,000 zone during the week. We thus reiterate our advice to focus on identifying stock-specific trading opportunities with favorable risk to reward ratio,” added Mishra.

Additionally, Senior Analyst Pravesh Gour of Swastika Investmart noted that Nifty is trading at approximately 19,550, hovering around its 20-day moving average (20-DMA). 

‘’There is a potential for a bounceback from this level. However, immediate resistance lies at the 10-day moving average (10-DMA) around 19,740. If Nifty manages to breach the 10-DMA, it might aim for higher levels at 19,900 and 20,000. On the downside, if Nifty falls below its 20-DMA, there is a risk of profit booking, and the subsequent support levels to monitor are 19,300 and 18,888,” said Gour.

Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions. 

Updated: 30 Jul 2023, 06:08 AM IST