India's CPI, Independence Day, Earnings Wrap — The Week Ahead
This week will see the market keep a keen eye on the India's Consumer Price Index as well as the first-quarter earnings season wrapping up.
The Reserve Bank of India remained cautious about inflation amid elevated food inflation. The Monetary Policy Committee retained the repo rate at 6.5% last week, by a 4:2 majority, to remain focused on the withdrawal of accommodation. Despite the 'hawkish' tone on inflation, economists expect a change of stance in October, followed by the first rate cut in December.
"We expect two RBI rate cuts of 25 basis points each in the current cycle, one in the fourth quarter of 2024 and the other in the first quarter of 2025, taking the repo rate to 6%. Given that growth is strong, we believe there will be an easing cycle, but a shallow one," said Pranjul Bhandari, chief economist at HSBC.
The Bank of Japan, in line with market expectations, hiked its benchmark interest rate to 0.25%. The markets now expect the central bank to go for further hikes, which will further strengthen the Japanese currency against the greenback.
The upcoming week will witness market giants like Godrej Industries Ltd., Hero Motorcorp Ltd., Hindalco Industries Ltd., and Vodafone Idea Ltd. posting their first-quarter earnings, setting the tone for market sentiment.
The primary market will see subdued action this week with nine SME initial public offerings and five listing.
Globally, China’s interest rates and activity data will be a key focus of Asia’s week ahead. The People’s Bank of China surprised investors last month by cutting its key rate in an unscheduled operation. Analysts expect a return to predictability this time, with a stand-pat decision delivered at
the usual session.
Market Last Week
India's benchmark equity indices closed higher on Friday but logged a second consecutive weekly loss, weighed by various global and Indian macro cues, including the yen carry trade, US recession fears, and the RBI governor's hawkish commentary during policy.
However, global market sentiment improved on Friday as recession fears eased after the US registered lower-than-expected jobless claims for the week. The upward revision of the Reserve Bank of India's fiscal 2025 growth estimates also added to the positive sentiment on Friday.
The NSE Nifty 50 ended 1.03%, or 247.65 points, higher at 24,364.65, and the S&P BSE Sensex closed up 1.04%, or 819.69 points at 79,705.91. Intraday, Nifty rose 1.3% and Sensex gained 1.4%.
Broader indices also ended higher, with the BSE Midcap and the Smallcap ending 1.2% and 0.79% higher on Friday.
All 20 sectoral indices on the BSE ended higher, with BSE IT gaining the most.
The market breadth was skewed in the favour of buyers. As many as 2,332 stocks rose, 1,571 fell, and 103 remained unchanged on the BSE.
Technically, on a weekly scale, Nifty has formed a hammer candle, indicating strength, said Hrishikesh Yedve, AVP, technical and derivatives research at Asit C. Mehta Investment Interrmediates Ltd. According to this pattern, if the index sustains above 24,420, it could trigger a fresh rally towards the 24,600-24,700 levels. Thus, a buy-on-dips strategy should be adopted for Nifty, he said. "On the downside, 24,000 will act as a major support level, where the 50-DEMA support is placed."
Q1 Earnings This Week
Muthoot Finance Ltd., Nazara Technologies Ltd., Dollar Industries Ltd., Hindustan Copper Ltd., Housing and Urban Development Corp., Vodafone Idea and Indian Railway Finance Corp. will post their first-quarter earnings, setting the tone for market sentiment.
The other companies to announce their results in the coming week include AIA Engineering Ltd., Godrej Industries Ltd., Hero Motorcorp, Hindalco Industries, Indian Railway Catering and Tourism Corp., and Piramal Enterprises Ltd.
Domestic Cues
India's Consumer Price Index, which will be revealed on Aug. 12, is forecasted to be 3.65% as compared to the previous 5.08%.
India's WPI inflation, to be announced on Aug. 14, is forecasted to be 2.39% as compared to the previous 3.36%.
Global Cues
China’s interest rates and activity data will be a key focus of Asia’s week ahead. The People’s Bank of China surprised investors last month by cutting its key rate in an unscheduled operation. A return to
predictability is expected this time, with a stand-pat decision delivered at
the usual session.
China’s activity data will probably show the recovery stuck in low-gear, with production staying weak and retail sales growth trailing last quarter’s average.
Data will likely show Japan’s GDP bounced back last quarter
after shrinking in the prior three months—a victory for the
Bank of Japan. Recent market volatility has fueled the argument
that the BOJ may have made a mistake in hiking rates in July.
Primary Market Action
The primary market will see subdued action this week with nine SME initial public offerings and five listing.
Saraswati Saree Depot's initial public offering will open next week. The offering consists of a fresh issue of 64.9 lakh shares and an offer-for-sale component consisting of 35.01 lakh shares, according to the price band advertisement by the company on Wednesday. The issue price for the IPO is set in the Rs 152-160 price band.
Corporate Actions Ahead
Computer Age Management Services Ltd., GRP Ltd., ICICI Bank Ltd., NHPC Ltd., EIH Associated Hotels Ltd., Great Eastern Shipping Co., Orient Green Power Co., Lloyds Metals And Energy Ltd., Brookfield India Real Estate Trust REIT, H.G. Infra Engineering Ltd. and Jindal Drilling & Industries Ltd. will have record dates for their dividends in the coming week.
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