Fed meet, Q1 earnings among key factors that may guide market this week

Benchmark indices, BSE Sensex and Nifty50, shed less than half a percent, whereas the broader markets were down up to a percent on a weekly basis. Selling pressure in auto, banking and power sector offset gains in IT, FMCG and realty.

“Domestic indices continued to advance ahead, tracking rising global risk appetite and higher domestic inflows from local investors. The earnings season continued to pump in optimism in India and global markets while the Fed is set to deliberate their easy-money policy in the meeting ahead,” said Vinod Nair, Head of Research at Geojit Financial Services.

Market momentum in the coming week is likely to be decided by quarterly earnings. The market is expected to react on the numbers of behemoths like RIL, ICICI Bank and ITC. The update on the global Covid-19 situation and US Fed meeting outcome will be in focus.

Here are the key factors that may steer the market going ahead:

FOMC meet: The Federal Open Market Committee’s (FOMC) statement is a big event for market in the week ahead, where a little bit more about the discussions surrounding the path of tapering will be keenly watched.

Markets are building up to the Federal Reserve meeting on Wednesday, but Fed Chairman Jerome Powell made it clear in his latest testimony to Congress that he continues to believe inflation pressures are largely transitory and there is no pressing need to signal an imminent shift in policy.

Q1 earnings: The June quarter earnings of India Inc will continue its momentum. The upcoming week is expected to be one of the busiest for Dalal Street. Initially, the market is likely to react to the June quarter results of bluechips like , ICICI Bank, Yes Bank and ITC.

A number of large companies from banking, IT, auto, pharma and realty sectors will announce their numbers this week. They include Kotak Mahindra Bank, Axis Bank, L&T, SBI Life, Vedanta, Tata Motors, DLF, IndusInd Bank, Dr. Reddy’s Labs, Maruti Suzuki, Nestle,

, Colgate Palmolive, Sun Pharma and Indian Oil, among others.

F&O expiry: The July futures and options contracts of Nifty and Bank Nifty will expire on Thursday. This may induce some volatility in the next few days as traders will race to square off their positions.

IPO and listing: In the week gone by, stellar listings of GR Infra, Clean Science and Zomato added to the investor frenzy on Dalal Street. The IPO of Glenmark Life Sciences will be open for subscription during July 27-29. The company will sell its shares at a fixed price band of Rs 695-720 to raise Rs 1,513.6 crore. Also, there is a buzz that Gujarat-based auto products company Rolex Rings will float its primary offering between 28-30 July. Official confirmation and more details are awaited.

The week will also mark the listing of Tatva Chintan Pharma Chem, which will make its Dalal Street debut on Thursday, July 29. Amidst the IPO frenzy, the issue was subscribed 180.36 times, becoming the second most subscribed IPO in 2021.

Delta variant: The widespread Delta variant scare led to market sell-off in the previous week as investors were worried about economic recovery. Market participants would not like to have a déjà vu in the coming week.

The main fear for investors is that a Covid-19 resurgence could force economies to shut down again — meaning travel, leisure and riskier assets may look less attractive.

FPI flow: FPIs have been on the sell mode in July with withdrawals close to Rs 5,700 crore during the month. They have been continuous sellers in the cash market.

“Heavy FII selling was seen at 15,750- 15,900 range. The weakness in FPI favourites may be due to FPI selling and portfolio churning. FPIs can be expected to continue selling around 15,900. Profit booking for FPIs had never been so easy. Eager retail investors and DIIs flush with funds are ready buyers even at higher levels,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Technical outlook: According to Ashis Biswas, Head of Technical Research at CapitalVia Global Research, 15,800 will be an important support level in the short-term perspective.