The RBI’s policy announcements, corporate earnings and global cues will be key drivers for domestic equity markets next week, say analysts. On a monthly basis, Nifty and Sensex finished with strong gains of 7.5% and 7.7%, respectively, in July. But for the week, the NSE and BSE indexes slid 1.08% and 1.37%, respectively.
At the start of the week, the market will also take cues from July auto sales numbers which signal some recovery in the sector hit hard by COVID-19. On the macro data front, market participants will be keenly awaiting PMI manufacturing and services sector numbers that are scheduled to be released in the first half of the week.
On the earnings side, Bharti Airtel, Tata Steel, Lupin, Titan, among others, will announce their quarterly numbers during the week.
The Monetary Policy Committee (MPC) of the Reserve Bank is scheduled to meet for three days beginning August 4 and will announce its decision on August 6. “RBI’s stance on moratorium or one-time restructuring of loans will set the tone for the entire financial sectors for weeks ahead,” said Jimeet Modi, Founder & CEO Samco Group.
Dalal Street week ahead – What analysts say
Jimeet Modi, Founder & CEO Samco Group
“It is RBI’s turn to console and mend the Indian economy, post US Federal Reserve’s status quo on interest rates and a repeat in pledge to use its ‘full range of tools’ to support the US economy. It is now in the hands of RBI to further lubricate the economy either by a decent rate cut or policy initiatives. In general, Bank Nifty has underperformed and pessimism continues to run high. Therefore, any move by RBI will create short term volatility in the banking stocks. Yes Bank’s capital raising was not lauded by the market as expected and hence it can be concluded that capital hungry sectors will remain under pressure going ahead. Investors are advised to remain cautious and partly book profits. They should wait for a sharp correction before making any fresh bets.”
Sameet Chavan, chief Analyst-Technical and Derivatives, Angel Broking
“In our sense, the actual weakness would start only if Nifty sustains below 10870 and hence, till then one should continue with a stock specific positive bias. However, on the flipside, 11300-11350 has also become a strong ceiling and the fresh leg of the rally would only unfold above this. Till then traders are advised to remain light within a slightly bigger range of 10870 – 11350.
The banking space has been the weakest link and the way it’s placed, the directional move in benchmark would mainly be triggered by the banking stocks only. Hence, all eyes would be on it. Apart from this, the entire Pharma space has been once again on a roll after a brief pause and there were some other sectoral movers also, that kept buzzing and bucking the trend. So, the pragmatic approach would be to focus on individual stocks till the time market remains in the above-mentioned range.”
Ajit Mishra, VP Research, Religare Broking
“Going forward, markets would react to the Auto sales numbers scheduled to release over the weekend. On the event front, they would also be keeping a close watch on the RBI monetary policy scheduled next week. On the earnings part, some of the prominent names like Bharti Airtel, Tata Steel, LT, Lupin, Titan and Voltas will announce their numbers during the week along with several others.
“We reiterate our cautious view on the market and suggest keeping the leveraged positions hedged. Nifty couldn’t surpass the hurdle at 11,350 last week while the downside also remained capped. Going ahead, we feel it may continue to hover within 10,950-11,350 zone and either side break would trigger the further directional move. Meanwhile, traders should focus on stock selection and managing overnight risk.” (With Agency Inputs)