Mumbai: Benchmark equity indices Sensex and Nifty declined last week, hurt by worse-than-expected Chinese macro data, falling European markets, lacklustre macroeconomic data and concerns over rising coronavirus cases in India.Frontline indices Sensex and Nifty dropped 0.43 per cent and 0.32 per cent respectively. However, the interest in mid and small cap stocks rose, with BSE mid and small cap indices logging 2.56 per cent and 1.98 per cent gains, respectively.
In the coming week, updates on another round of US stimulus, US-Sino tensions, AGR case hearing, coronavirus infections and June quarter earnings from mid and small cap companies are likely to dictate the market direction.
Here are a few key factors that may guide stock markets next week:
Hopes of another US stimulus package: There have been expectations that the US may dole out another stimulus package to help tide over the Covid-19 crisis. In a series of tweets on Friday, US President Donald Trump voiced his support for a second round of direct payments, more small business loans, rental assistance and additional direct aid to states and municipalities.
US-China tensions: The United States and China have delayed a review of their Phase 1 trade deal initially slated for Saturday, sources familiar with the plans told Reuters, citing scheduling conflicts and the need to allow time for more Chinese purchases of US exports. However, no new date for the initial six-month compliance review between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He has been decided yet.
Q1 earnings: As we enter the fag end of the earnings season, a lot of mid and small cap companies are slated to announce their June quarter earnings next week, and may trigger stock-specific action.
Lux Industries, Petronet LNG, Hindustan Aeronautics, Uflex, Zee Entertainment Enterprises, CSB Bank, Muthoot Finance, V2 Retail, Oil India are some of the companies that are scheduled to announce their quarterly earnings next week.
Rising coronavirus infections: The Covid-19 pandemic crossed another grim milestone as India reported 63,489 new coronavirus cases, taking the total tally at 25.89 lakh. The death toll from the virus went past 50,000 on Saturday. Over 13,500 deaths have been reported from across the country so far this month. By contrast, the whole of July saw a total of 19,122 fatalities.
AGR case: The next Supreme Court hearing of the adjusted gross revenues (AGR) case for telcos is scheduled for August 17. The apex court, in its hearing on August 14, directed telcos under insolvency to submit details of spectrum sharing agreements that they have entered into. The court has also asked for the spectrum sharing agreement between Reliance Communications and Reliance Jio to be placed on record.
Domestic data and updates: The minutes of the Monetary Policy Committee held between August 4-6 are due on August 20.
Investors will also watch out for the foreign exchange reserves data slated to be released on August 21. Foreign exchange reserves in India increased to $534570 million in July 31 from $522630 million in the previous week.
Global macroeconomic data: On the global front, investors will be eyeing macro-economic reports from the world’s largest economy, United States, starting with Foreign Bond Investment, Overall Net Capital Flows on August 17 followed by Redbook on August 18, FOMC Minutes on August 19, Philadelphia Fed Manufacturing Index, Initial Jobless Claims on August 20 and finally Markit Manufacturing PMI Flash, Existing Home Sales and Baker Hughes Total Rig Count on August 21.
FII inflows: The markets have avoided a steep correction in recent times, thanks to robust inflows from foreign institutional investors (FIIs), even as domestic institutional investors have been selling. It remains to be seen how the next week pans out on this note,
FII were net buyers in the equity segment last week, with gross purchases of Rs 41,926.41 crore and gross sales of Rs 23,620.90 crore, leading to a net inflow of Rs 18,305.51 crore.
Technical cues: According to technical analyst Milan Vaishnav, Nifty is likely to face resistance at 11,280 and 11,400 levels on the upside, while supports will come in at 11,065 and 10,900 levels.
“All in all, it would be of paramount importance for Nifty to keep its head above the 11,915-11,015 zone in the coming days. This 100-point area represents a strong support, and any breach of these levels will bring in incremental weakness in the market,” said Vaishnav.
Credit: Stocks-Markets-Economic Times