Sensex, Nifty this week: Q1 results to Fed rate decision, factors that may drive Dalal Street

Last week, Indian equity markets ended with gains of around a per cent on the back of continued foreign capital inflow and a rally in banking stocks after HDFC Bank announced better-than-expected Q1 results. This week, the market will be looking for, major economic data such as bank loan growth, India’s Infrastructure output, US GDP growth rate, and Fed interest rate decision, which will be released during the week. Along with this, first-quarter earnings from some of the top names in the Indian stock markets such as Tata Steel, TVS Motor Company, Asian Paints, Tech Mahindra, Bajaj Auto, Larsen and Toubro, Tata Motors, Axis Bank, Bajaj Finance, Punjab National Bank, and Bajaj Finserv will also be in focus.

Quarterly Results: In the ongoing earning season, investors would be focusing on Q1 earnings from some of the top players in the Indian banking and finance space such as Canara Bank, HDFC Asset Management Company, PNB Housing Finance, Axis Bank, Bajaj Finance, Punjab National Bank, Bajaj Finserv, and Mahindra and Mahindra Financial. Besides this, key blue chip stocks including Tata Steel, TVS Motor Company, Asian Paints, Tech Mahindra, Bajaj Auto, Larsen and Toubro, Tata Motors, Bharat Petroleum Corporation, Cipla, and Dr Reddy's Laboratories will also declare their first quarter results. 

Major corporates such as SRF, CEAT, Cyient, Dixon Technologies, Jubilant FoodWorks, Jindal Stainless, REC, Shree Cement, Tata Consumer Products, Bharat Electronics, Coromandel International, Indian Oil Corporation, Marico, and NTPC are important results scheduled for the week.

Major economic events: On the economic front, investors will be eyeing the data on government budget value and foreign exchange reserves, scheduled to be released on July 28. On the same date, India's deposit growth, bank loan growth, and infrastructure output are also scheduled to be released.

Infrastructure output growth in India stood at 4.3 per cent year-on-year in May 2023, the same pace as in the previous month and below market forecasts of a 4.6 per cent rise. Output surged for cement (15.5 per cent vs 11.6 per cent in April) and rebounded for refinery products (2.8 per cent vs -1.5 per cent).

US market data: On the global front, investors would be eyeing few economic data from world’s largest economy, the United States (US), starting with S&P Global Manufacturing PMI, S&P Global Composite PMI, S&P Global Services PMI on July 24, followed by CB Consumer Confidence on July 25, New Home Sales, and Fed Interest Rate Decision on July 26, Fed Press Conference, GDP Growth Rate, Goods Trade Balance, Initial Jobless Claims on July 27 and Personal Spending, Personal Income, Baker Hughes Oil Rig Count on July 28.

Market outlook: Deepak Jasani, Head of Retail Research at HDFC Securities, said the global stocks were mixed on Friday, as the tech sell-off on Wall Street sent jitters through the market while investors prepared for key central banks to announce their latest policy decisions next week. Nifty ended in the negative on July 21 after a six-day winning streak. On a weekly basis, it rose 0.92 per cent losing some of the early week gains towards the end of the week. 

"On weekly charts, the Nifty has formed some sort of shooting star pattern, raising concerns about topping out of the Nifty. The Nifty could stay in the 19524-19,854 band for the near term. A move below 19,524 could confirm the formation of a top at the weekly high of 19,992," Jasani said.

Foreign Investments: Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the FPI flows into India continued unabated in July, too. "India is the largest recipient of FPI flows year to date among emerging markets. While selling in China continues." NSDL data shows in this month till July 21, FPIs have invested Rs 43804 crores in India. 

"FPIs continue to invest in financials, automobiles, capital goods, realty, and FMCG. FPI buying in these sectors have contributed hugely to the surge in prices of stocks in these sectors and the Sensex and Nifty scaling record highs," he said, adding that the concern, however, is the rising valuations. At high valuations, some negative triggers can lead to a sharp correction. This happened on Friday when the Sensex tanked by 887 points on negative news from Infosys and HUL.