Driven by positive US GDP data, expectations of improved global demand and unflinching faith of domestic investors, the stock market has recovered all its post-Budget losses to leave many market veterans surprised.
Given Friday’s momentum, Sensex looks poised to break past its previous peak and Nifty may even touch 25,000-level for the first time in history.
“Moving forward, the direction of the domestic market will likely be influenced by the progress of the earnings season. Additionally, global economic updates, including US Fed & BoE monetary policies, US employment data, and Eurozone GDP figures, are expected to impact market trends,” said Vinod Nair of Geojit Financial Services.
Here are 6 key factors that may dictate Nifty in the week:
1) US Fed meeting
The US Federal Reserve is set to announce its interest rate decision on July 31st, which will be crucial as the market anticipates a potential rate cut soon this year.
“US data should give officials more confidence that inflation is heading to 2% and we suspect attention will start focusing on achieving a ‘soft landing’ for the economy. Next week’s FOMC meeting should lay the groundwork for a September rate cut as policy starts shifting from restrictive territory to something more neutral,” ING Group said.
2) Q1 Results
On the domestic front, Q1 earnings will remain a key trigger, with many large companies scheduled to report their results. On Monday, the market will react to earnings of ICICI Bank while during the rest of the week companies like Maruti, M&M, Titan, SBI, Tata Motors, Tata Steel, Tata Consumer, Adani Total Gas, Adani Enterprises and Zomato would report their quarterly numbers.
3) FII flows
FPI investment in equity through 26th July stood at Rs 33,688 crore. “During the same period FPI investment in debt stands at Rs 19222 crore. For 2024 through 26th July FPI investment in equity stands at Rs 36888 crores and the investment in debt stands at Rs 87846 crores,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Since India is one of the best performing markets in the world, the FIIs cannot afford to sell continuously in India even though valuations are getting stretched, he said.
4) Global markets
Global investors will in the coming week look out for earnings from the US market’s biggest tech companies, a Federal Reserve policy meeting and closely watched employment data in a week that could determine the near-term trajectory of US stocks following a bout of severe turbulence, analysts said.
5) Macros
The outlook for the market will be guided by the major domestic and global economic data such as India Infrastructure Output (YoY) (Jun), HSBC India Manufacturing PMI (Jul), US JOLTs Job Openings (Jun), China Manufacturing PMI (Jul), US ADP Nonfarm Employment Change (Jul), UK BoE Interest Rate Decision (Aug), US ISM Manufacturing PMI (Jul) and US Nonfarm Payrolls (Jul).
6) Technical
Nifty could face resistance in the coming week from the 24,963-25,085 band while the 24,504-24,600 band could offer support. The view remains mildly bullish for the near term, said Deepak Jasani of HDFC Securities.