US Fed interest rate decision, June quarter earnings to drive markets this week: Analysts

The rupee movement against the US dollar and global oil benchmark Brent crude will also remain in focus this week.

This week, all eyes will be on the US Fed and European Central Bank policy meets. Investors would also take cues from various macro data that would be released from the US - Q2 GDP, Services PMI and Consumer Confidence data. With the quarterly results season picking up pace, we expect a lot of stock-specific action. Apart from index heavyweight Reliance, Banking sector is also likely to be in focus as ICICI Bank and Kotak Bank announced their results over the weekend.

Domestic market yet again touched a new high of 19,992 during the last week and just shied away from touching the 20K levels as profit booking set in on the last day. In the backdrop of consistent FII buying (Rs 21,300 crore in July so far), sound macros and micros and surplus monsoon so far, Nifty has rallied by 15 per cent since April 1, 2023 and 4 per cent in July till date. Nifty shall most likely cross the 20K mark this week given the ongoing momentum and clear strength visible in the market. Results of strong heavyweights are likely to further influence the market direction in the near term.

Last week, Nifty registered gains of 181 points (+0.9 per cent) at 19,745 levels. Midcaps too gained 0.7 per cent but smallcaps sharply outperformed with gains of 1.8 per cent. PSU Banks were the biggest gainers (+4 per cent) post strong results announced by many mid and small PSU Banks. Private Banks too were up 2.8 per cent following robust numbers from HDFC Bank. IT was the biggest loser, down 3.5 per cent after Infosys lowered its FY24 growth guidance sharply. Cable and wire stocks too witnessed a smart rally after Polycab reported strong volume growth in the June quarter.

On the global front, concerns receded slightly as cooler inflation and weakness in few US macro data points led to hopes of the US Fed soon taking a rate hike pause. FOMC in this week’s meeting is expected to take a hike of 25bps but it is the outlook that would hold importance as market is expecting the Fed to take a pause from consecutive meetings. In the US too, results so far have been fairly healthy which has further supported the positive sentiments.

On the domestic front, Jio Financial’s price discovery took place during last week and now further details are awaited with regards to its listing. Primary market continues to buzz with Netweb Technologies IPO getting strong response. Utkarsh SFB which saw stellar subscription got listed on Friday with bumper gains of 92 per cent from its IPO price. This week, Yatharth Hospital IPO would be available for subscription.

Nifty has been making higher highs from the last seventeen weeks. Now it has to hold above 19,700 zones to extend the move towards 20,000 zones while on the downside support is placed at 19,500 zones. We suggest investors to look for buy on dips strategy as the Q1 earning season is expected to be overall healthy.

(The writer heads retail research at Motilal Oswal Financial Services Limited)