Share market expectations: 5 things to know before tomorrow's opening bell

Extending the losses for the fourth straight session, equity benchmark indices - Sensex and Nifty - on Monday tracking a selloff in heavyweights Reliance Industries, HDFC twins and Kotak Bank, rising coronavirus cases and weak Asian peers. The BSE Sensex ended 667.29 points or 1.77 per cent lower at 36,939.60, while the NSE Nifty tumbled 181.85 points or 1.64 per cent to 10,891.60.

Titan, Tata Steel, HCL Tech, L&T and SBI were among the gainers. Kotak Bank, IndusInd Bank, Axis Bank, ONGC, HDFC Bank, Bajaj Auto and Reliance Industries (RIL) were among the major laggards.

"Global cues were negative as US lawmakers struggled to finalise a new stimulus plan and rising global COVID-19 cases. On the domestic front, Banking stocks witnessed profit booking today ahead of the RBI monetary policy on August 6. Also profit booking continued in Index heavyweight Reliance industries for the second consecutive day. We would advise investors to remain defensive in their portfolio approach," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

Traders on the other hand are advised to stay cautious and keep booking profit at regular intervals, Khemka added. "Going ahead, investors would watch out for any development over the US stimulus announcement and RBI credit policy for a possibility of another rate cut - which could provide some cheer to the markets," he noted.

Here are 5 things to know before Tuesday's opening bell:

Global markets

The investors and traders are expected to take a cue from the global stock markets tomorrow. Globally, bourses in Shanghai, Tokyo, Seoul settled on a positive note, while Hong Kong ended in the red. Stock exchanges in Europe were also trading on a positive note in early deals. Globally, traders will also keep a track on macroeconomic data by the US.

Crude oil prices fell today on concerns around rising COVID-19 cases worldwide and oversupply worries.

RBI monetary policy

All eyes will be on the Reserve Bank's rate-setting Monetary Policy Committee (MPC) meet that begins tomorrow. The meeting would decide on the policy stance amid the urgency to revive the coronavirus-hit economy and increased demand for one-time loan restructuring by industry chambers.

PMI manufacturing data

Even as the PMI manufacturing data was released during the market hours today, investors are expected to take it into account in tomorrow's trade. India's manufacturing sector activity shrank at a slightly faster pace in July as demand conditions remained subdued amid prolonged closures. IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 46 in July, down from 47.2 in June.

Coronavirus cases

The number of coronavirus cases globally has crossed 1.8 crore, while the infection count in India has crossed 18 lakh. Foreign fund outflows and concerns over rise in cases across the world have kept investors on the edge, analysts said.

Technical insights

"The short term trend of Nifty has reversed and the recent swing high of 11,340 could be considered as an important top reversal pattern and this area is unlikely to be breached in a hurry. One may expect further weakness in the market in coming sessions. The next downside levels to be watched around 10,600, which could be achieved in the next one week. Immediate resistance is placed for any pullback rally is at 11,075 levels," said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

"Markets may remain in a consolidation phase as there is high uncertainty regarding COVID-19 situation to normalise as well as unsupportive global cues. Further, along with RBI monetary policy (scheduled on August 6), market participants would keep a close watch on global cues (announcement of the additional stimulus package, macro data and US-China tension) as well as fluctuation in crude oil prices. Meanwhile, investors must opt for value-buying in select pockets to build a long-term portfolio. Now, the next support for the Nifty exists around 10,750-10,800 zone," said Ajit Mishra, VP - Research, Religare Broking.

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