The Week Ahead: All eyes on RBI meet, PMI data

Global markets were positive as sentiments got uplifted by a host of strong earnings during the week
Last Updated 01 August 2022, 02:27 IST

Equity markets continued their northbound journey and Nifty reclaimed its 17,000-mark on the back of healthy corporate earnings, in-line global events outcome and the foreign institutional investors (FII) turning net buyers in some sessions. In fact, the indices closed in the green for the first time in four months. Nifty/Sensex gained ~440/1,500 points (+2.6%/+2.7%) during the week to close at 17,158/57,570 levels.

Broader market too gained with Midcap 100/Smallcap 100 up 2.0%/0.5% for the week. Except for the auto and PSU banks sector, all the sectors ended in green with a majority gaining 2%-8%. FIIs sold to the tune of just Rs 1,200 crore for the week (till Thursday) while the domestic institutional investors (DII) bought equities worth Rs 2,200 crore.

Global markets were positive as sentiments got uplifted by a host of strong earnings during the week. Two major events unfolded this week where US Fed hiked policy rates by 75bps and toned down its aggression a little, while US GDP for Q2CY23 declined by 0.9% - both the outcomes being in line with market expectation, thus cheering the investors.

Domestic markets, after their recent rally, are now back at a 3-month high. Positive global cues and strong results from heavyweights continued to support market sentiments. The monsoon, too, has been progressing well with rainfall now standing at 11% surplus at a pan-India level.

The rupee also cooled off from above 80 levels, thus, providing relief to the market. The metal sector surged the most as rising global prices and reducing inventory levels along with a decline in the dollar index uplifted the sector. IT sector too witnessed buying as US tech biggies reported strong numbers leading to Nasdaq bouncing back.

Overall markets have recovered by 13% from their low of 15,183 in June led by softening in commodity prices, reduced intensity of FIIs selling, healthy monsoon and better than expected earnings season.

FII selling, too, cooled off with the total outflow in July restricted to just Rs 7,500 crore as compared to Rs 58,100 crore in June.

Moving forward, all eyes would be on the monetary policy meetings of the RBI and Bank of England (BoE) next week, where investors expect them to soften their aggression a little, following US Fed.

Apart from these, PMI data would be released by both India and US along with US jobless claim data. Investors would also watch out for the OPEC meeting outcome which might keep oil prices on the edge.

Overall, we expect the positive momentum to continue in the market with bouts of volatility. Stock-specific action would continue as the busy results season continues.

(The writer is the Head of Retail Research, MOFSL)

(Published 31 July 2022, 18:13 IST)

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