Sensex, Nifty this week: From India's trade deficit to Q1 results to US Inflation, factors that may drive Dalal Street

Last week, Indian benchmark indices ended in green territory, as India's gross GST revenue collection numbers and continued foreign fund inflows boosted the investor’s sentiments. This week, the market will be looking at the start of a fresh earnings season Q1 FY24 with IT giants such as TCS, HCL, and Wipro announcing their latest quarterly performance along with this, major economic data such as the Index of Industrial Production (IIP), Consumer Price Inflation (CPI), Balance of Trade data, and US Inflation data will be released during the week.

Quarterly Results: This week, investors would be majorly looking for Q1 earnings from the industry’s big-wigs such as HCL Technologies, TCS, Wipro, Tata Metaliks, Avenue Supermarts, Tata Steel Long Products, Federal Bank, etc. 

Major economic indicators: On the economic front, market participants would be eyeing the data of the Index of Industrial Production (IIP), which is scheduled to be released on July 12. On the same day, the Consumer Price Inflation Index (CPI) for the month of June will be announced. The Consumer Price Index in India increased 0.51 per cent in May of 2023 over the previous month. Traders will also be looking forward to the Wholesale Price Inflation Index (WPI), Balance of Trade data, scheduled to come out on July 14.

US market data: On the global front, investors will be eyeing macro-economic reports from the United States, starting with Consumer Inflation Expectations on July 10 followed by Redbook on July 11, Inflation Rate, Core Inflation Rate on July 12, Initial Jobless Claims, Producer Price Inflation on July 13 and finally Import Prices, Export Prices, Michigan Inflation Expectations, Baker Hughes Oil Rig Count on July 14.

Foreign Investment trends: Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the flood of FPI flows into India continues with Rs 21,943 crore of inflows (including bulk deals) till July 8. If this trend continues, monthly FPI flows in July will exceed the figures in May and June, which were Rs 43,838 crores and Rs 47,148 crore respectively.  

This ‘U-turn’ in FPI flows  - which were negative Rs 34,626 crores in January and February (combined) - this year has been the primary driver of the strong rally that we are witnessing in the market since the lows of March, he added. "FPIs have been steadily buying in financial services, automobiles, capital goods, and construction. Recently, they have stepped up buying in FMCG and power. The selling trend in IT continues. This Sustained FPI buying has pushed valuations into expensive, but not yet in bubble territory," Vijayakumar said.

Technical outlook for Nifty: Rupak De, Senior Technical analyst at LKP Securities, said, "Nifty experienced a significant decline after failing to maintain its position above 19,500. This drop led to the index falling below the 21EMA on the hourly chart, indicating an increasing bearish sentiment in the market." Furthermore, the hourly RSI has shown a bearish crossover, adding to the negative outlook. The immediate support level is identified at 19300, while the resistance level remains at 19,500.