Sensex, Nifty this week: Banking and IT sector results to US Industrial Production, factors that may drive Dalal Street

Last week, Bulls strengthened their grip on Dalal Street with frontline indices hitting all-time highs, settling above their crucial 66,000 (Sensex) and 19,550 (Nifty) levels as traders turned hopeful that the US Federal Reserve, the central bank of America, would pause rate hikes. This week, the market will be looking for Q1 earnings from some of the biggest names in the Indian banking and IT space such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Infosys, Mphasis, and LTIMindtree. Along with this, major economic data such as Indian Foreign Exchange Reserves, and US Manufacturing and Industrial Production data will be released during the week.

Quarterly Results: This week, investors would be focusing on Q1 earnings from some of the top players in the Indian banking and finance space such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IndusInd Bank, and L&T Finance Holdings. Some PSU banks like Central Bank of India, South Indian Bank, Union Bank of India, and Bank of Maharashtra will also put out their results.

IT majors such as Infosys, Mphasis, Persistent Systems, Mastek, LTIMindtree, Tata Elxsi, Coforge, and L&T and Technology Services will also declare their first quarter results. Besides this, Havells India, Hindustan Unilever, Reliance Industrial Infrastructure, Crisil, Tata Communications, Ashok Leyland, Hindustan Zinc, JSW Steel, and UltraTech Cement among others are important results scheduled for the week.

Major economic events: On the economic front, traders will be eyeing the Foreign Exchange Reserves data which is scheduled to be released on July 21. India's foreign exchange reserves increased to 596.100 billion in the previous week from $595.050 billion on June 30.

The Monsoon Session of Parliament will begin on July 20, 2023, and go on till August 11. This will be the first parliamentary session to be held in the new parliament building. Besides, Union Finance Minister Nirmala Sitharaman and Reserve Bank of India (RBI) Governor Dr. Shaktikanta Das will jointly chair a meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG) to be held on July 17-18 in Gandhinagar where 66 delegations will be in attendance.

US market data: On the global front, investors would be eyeing a few economic data from the United States (US), starting with NY Empire State Manufacturing Index on July 17 followed by Industrial Production, Manufacturing Production, and NAHB Housing Market Index on July 18, API Crude Oil Stock Change, and 20-Year Bond Auction, on July 19, Initial Jobless Claims, Existing Home Sales on July 20 and Baker Hughes Total Rig Count on July 21.

Market macros: Vinod Nair, Head of Research at Geojit Financial Services, said the initial weakness in the domestic market was driven by anticipated soft earnings in the IT sector and negative cues from the US markets. Concerns arose from an uptick in domestic food inflation, influenced by higher mandi prices trending above Minimum Support Prices (MSP), and muted Kharif sowing, which led investors to exercise caution. The progression of the monsoon and the trend of Kharif sowing in July will be crucial factors in determining future inflation, he said.  "However, controlled inflation in the US has instilled optimism among investors, who believe that a 25-bps rate hike would be sufficient to stabilize the US economy. This positive outlook has contributed to strong buying in Indian IT stocks, despite muted Q1 earnings."

"Consequently, the US dollar and bond yields have fallen. 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 (VIX). 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," Nair said.