Union Budget 2024, Earnings, Manufacturing PMI: The Week Ahead

After another week of stellar rally, all eyes will shift to the Union Budget 2024 that will be presented by Finance Minister Nirmala Sitharaman on Tuesday. India's equity markets will also be guided by June quarter earnings and data on India's manufacturing sector.

The upcoming week will see Hindustan Unilever Ltd., Axis Bank Ltd., IDBI Bank Ltd., Torrent Pharmaceuticals Ltd., Federal Bank Ltd. and Indraprastha Gas Ltd. post their first-quarter earnings, setting the tone for market sentiment.

Investors are cautious ahead of Union Budget next week which will provide next set of directions to the market. Earnings season will also pick up pace which will result in stock specific actions.

"From a technical perspective, it is worth noting that Nifty has formed a ‘Shooting Star’ on a weekly time and a ‘Bearish Engulfing’ on a daily time frame at record highs. This could potentially signal a shift in the trend or a temporary pause in the current upward momentum for the Bulls of the D-Street," said Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One Ltd.

Primary market activity will be relatively quiet, with eight SME initial public offerings and seven listing. There will be no new mainboard IPOs this week.

Globally, all eyes will be on US as its US Core PCE data is expected on Friday. The UK and Euro Zone will also be releasing its manufacturing and services PMI.

India's equity gauges rose for the seventh week to record the best streak of weekly gains in over seven months. The truncated yet eventful week started off with a flurry of activity but ended on a subdued note.

The benchmark indices showed limited movement and stayed within a narrow range before the mid-week holiday sessions. However, in the later part of the week, there were significant and volatile fluctuations in the market.

The NSE Nifty 50 and the 30-stock Sensex rose 0.12% and 0.11%, respectively, in the week ended July 19 to record a straight seventh-week gain. This is the second time that the benchmarks recorded the best winning streak after Dec. 11, 2023, when the indices rose for seven consecutive weeks.

During the week, four sectors logged gains out of 12, while six declined and two remained flat. The NSE Nifty IT emerged as the top performing sector by climbing over 2.31% during the week. NSE Nifty Media declined the most as it fell by 5.36%.

Gains in the shares of Infosys Ltd., ITC Ltd., Asian Paints Ltd., and Britannia Industries Ltd. cushioned the fall in the Nifty during the last leg of trade on Friday.

With the markets still continuing its positive trend analysts expect 24,500 and 24,350 would act as a key support zone for the bulls while 24,850-25,000 could be the key resistance areas for the traders.

"As long as the index remains below 24,855, a sell-on-rise strategy needs to be adopted in Nifty," said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.

The country's budget will be the most important event to watch out for during the coming week on the domestic front. All eyes will be on Finance Minister Nirmala Sitharaman as she presents the first budget for the new Modi government on Tuesday.

Nikkei S&P Global Manufacturing Purchasing Managers' Index and Nikkei Services PMI is expected to be released on Wednesday. The previous Manufacturing PMI was at 58.3 while the Services PMI was at 60.5.

The Reserve Bank of India is expected to release the data for Bank loan growth, deposit growth and foreign exchange reserves on Friday.

The US government will release the estimate of gross domestic product for second quarter on July 25. The manufacturing and services PMI for US will be released on Wednesday, while the core PCE Price Index will be released on Friday.

The Fed Balance sheet listing the assets and liabilities of the Federal Reserve System will be released on Thursday in a weekly report called 'Factors Affecting Reserve Balances'.

The UK's composite, manufacturing and services PMI will be out on July 24 and Euro zone will release its manufacturing and services PMI. S&P Global will also released Composite PMI for both US and UK.

Hindustan Unilever Ltd., Torrent Pharmaceuticals Ltd., Axis Bank Ltd., Federal Bank Ltd., IDBI Bank Ltd., and Indraprastha Gas Ltd. will post their first-quarter earnings, setting the tone for market sentiment.

The other companies to announce their results in the coming week include United Spirits Ltd., Suzlon Energy Ltd., Aditya Birla Sun Life AMC Ltd., Coforge Ltd., Bajaj Finance Ltd., Heritage Foods Ltd., Baja Finserv Ltd., Bikaji Foods International Ltd., ICICI Securities Ltd. and DCB Bank Ltd.

The primary market will see subdued action this week with eight SME initial public offerings and seven listing. However, there will be no new IPOs this week on the mainboard.

Sanstar Ltd. which opened on Friday is looking to raise Rs 510.2 crore via fresh issue of 4.18 crore shares and an offer for sale of 1.19 crore shares. The issue price for the IPO is set in the Rs 90-95 price band. The IPO will close on Tuesday and list on July 26.

RNFI Services Ltd., VVIP Infratech Ltd., VL Infratech Ltd., Chetana Education Ltd., Clinitech Laboratory Ltd., Manglam Infra And Engineering Ltd. and Aprameya Engineering Ltd. are set to open in the coming week.

HCL Technologies Ltd., Fortis Healthcare Ltd., Pidilite Industries Ltd., MRF Ltd., Radico Khaitan Ltd., United Breweries Ltd., Godrej Agrovet Ltd., JK Tyre and Industries Ltd., RBL Bank Ltd., Zydus Lifesciences Ltd. will have record dates for their dividends in the coming week.

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