Q1 earnings, FII action among 8 factors that’ll steer D-Street this week

Indian benchmark indices ended the week in the red, with the Nifty closing 0.7% lower. A host of key domestic and global events lined up for the week ahead are likely to influence market sentiment when trading resumes on Monday.

On Friday, the Nifty declined by 143.05 points, or 0.6%, to end the day at 24,968.40.

Commenting on the day’s action, Rupak De, Senior Technical Analyst at LKP Securities, said the Nifty remained under selling pressure on Friday, slipping towards 24,900, where it found initial support. The index stayed above the 50-day exponential moving average (50 EMA) and appears poised for a short-term pullback after the recent sharp correction, he noted. However, De maintained that it remains a ‘sell on rise’ market as long as the Nifty trades below 25,260. On the downside, selling pressure may intensify if the index breaches the 24,900 mark, he added.

Key factors likely to impact market movement this week:

1. Q1 Earnings

It will be an earnings-heavy week, with 286 companies scheduled to announce their June quarter results over the next six days. Among the Nifty constituents, results are expected from Eicher Motors, UltraTech Cement, Bajaj Finance, Bajaj Finserv, Dr. Reddy’s Laboratories, Infosys, Tata Consumer Products, Nestlé India, SBI Life Insurance, Cipla, and Kotak Mahindra Bank.

Other widely tracked companies set to report include One 97 Communications (Paytm), Indian Railway Finance Corporation (IRFC), United Breweries, Zee Entertainment, and Bajaj Housing Finance.

The Street will also react to the earnings of Reliance Industries and JSW Steel, which were announced on Friday after market hours. Additionally, results declared on Saturday by HDFC Bank, ICICI Bank, Yes Bank, and Reliance Power will keep these stocks in focus when markets reopen.

2. Corporate Action

A flurry of corporate actions is lined up this week, with record dates for dividends, rights issues, buybacks, and bonus shares scheduled for over 100 companies during the five-day trading window.

Companies announcing record dates for dividend payouts include:

Life Insurance Corporation of India (LIC), Hero MotoCorp, Divi’s Laboratories, Bharti Hexacom, Shree Cement, Aditya Birla Sun Life AMC, Radico Khaitan, Info Edge (India), Union Bank of India, and Zydus Lifesciences.

Meanwhile, Mahindra Logistics has set July 23 as the record date for its rights issue, and Focus Business Solution will determine eligibility for its bonus issue during the week.

3. US markets

Wall Street ended mixed on Friday, with the S&P 500 and Nasdaq struggling to notch meaningful gains as investors looked ahead to more corporate earnings and remarks from the Federal Reserve Chair next week.

The Dow Jones Industrial Average slipped 142.30 points, or 0.32%, to close at 44,342.20. The S&P 500 ended flat at 6,296.79, while the Nasdaq Composite inched up 10.01 points, or 0.05%, to settle at 20,895.70.

4. IPO watch

In the mainboard segment, four initial public offerings (IPOs) will open for subscription this week. Among them, IndiQube Spaces’ Rs 700 crore book-building issue will open on Wednesday, July 23, with a price band of Rs 225 to Rs 237 per share. GNG Electronic’s IPO will also launch on the same day.

Brigade Hotel Ventures’ IPO will open on July 24, while Shanti Gold International will open on Friday, July 25, and close on Tuesday, July 29.

In the SME segment, Monarch Surveyors & Engineering Consultants will open their IPO on July 22, TSC India on July 23, and Patel Chem Specialities on July 25.

Meanwhile, three listings are likely this week: Anthem Biosciences, Monika Alcobev, and Spunweb Nonwoven.

5. FII / DII Action

Market action will hinge on the behaviour of foreign institutional investors (FIIs) in the coming week. On Friday, FIIs were net buyers, purchasing equities worth Rs 374.74 crore, while domestic institutional investors (DIIs) also remained net buyers, investing Rs 2,103.51 crore.

6. Technical Factors

Decoding Nifty's technical setup, Hrishikesh Yedve, AVP – Technical and Derivative Research at Asit C. Mehta Investment Intermediates, noted that the index has broken below its 34-Day Exponential Moving Average (34-DEMA) on the daily chart and formed a red candle, indicating weakness.

However, Nifty managed to hold above the 50-DEMA, currently placed near 24,930. A decisive break below this level could drag the index lower towards the 24,750–24,500 zone. On the other hand, if the index sustains above 24,930, a pullback rally towards 25,200–25,250 cannot be ruled out, Yedve added.

7. Rupee Vs Dollar

The Indian rupee weakened slightly on Friday, marking its second consecutive weekly loss, as the U.S. dollar rebounded from a more than two-year low and sustained equity outflows pressured domestic markets. The rupee closed at 86.1475, compared to its previous close of 86.0750, down 0.4% on the week.

In the near term, the rupee is “likely to hover closer to 86.50 than 85.50,” according to a trader at a large private bank. The trader attributed the pressure to corporate dollar demand and outflows from Indian equities.

Foreign investors have net sold around $300 million in Indian equities so far in July, after infusing $1.7 billion in June.

Meanwhile, the dollar index was poised for its second straight weekly gain, supported by robust U.S. economic data that tempered expectations of imminent rate cuts by the Federal Reserve.

8. Crude Oil

Crude oil prices remain a key variable for stock markets, given their ability to influence a country's inflation trajectory. Oil prices edged lower on Friday, despite gains in the previous session, as concerns over drone attacks on northern Iraqi oil fields—which could disrupt supply—weighed on sentiment.

U.S. West Texas Intermediate (WTI) crude settled at $67.30, down $0.24 or 0.36%, while Brent crude futures were trading near $69.28, up $0.29 or 0.42%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)