InvestorQ : What are likely to be the major trading and investment cues for the last week of July?
Aditi Sharma made post

What are likely to be the major trading and investment cues for the last week of July?

Aashna Tripathi answered.
3 years ago

The coming week is likely to be dominated by the meeting of the Federal Reserve which will conclude on July 31. The markets saw aggressive selling in the previous week with FPI sellers in most of the days. Here is what you need to watch out for in the coming week.

· The Fed Meet will hold the key to the markets in the coming week. The global markets are still split between whether the rate cut will be 25 bps or 50 bps. In fact, markets were disappointed after the Boston Fed hinted that 50 bps rate cut may not be feasible.

· Continuing on the subject of the Fed meet, the CME Fedwatch Tool will be closely tracked. It assigns probabilities to rate cuts on a real time basis. Around one week back the tool had assigned a 50% probability to a 50 bps rate cut but now that probability is down to just 20%. So, it is hinting at a more likely 25 bps rate cut.

· Oil and the geopolitical situation in the Middle East will be a key input factor in the coming week. Iran is still holding on to the two tankers seized near the Strait of Hormuz of British Flag and that likely to keep tensions high.

· FPI action will be closely watched in the coming week. FPIs have already sold close to $1.75 billion in equities post the budget and the Sensex has corrected 2300 points. FPIs will be looking for greater clarification on the FPI tax issue from the FM. A positive tone should be positive for the markets.

· Over the weekend, the GST Council Meeting cut the rates of GST on Electrical Vehicles (EV) from 12% to 5% with a similar cut on EV batteries too. This will be a positive for the auto companies making big EV plans. However, currently the auto sector has more immediate survival issues to worry about.

· There will be a reaction to the last week results continuing with most of the companies from the auto, banking & financials and FMCG space disappointing. FMCG and Autos have seen real growth issues while banks and financials have seen worsening asset quality.

· The coming week is expected to be a heavy week in terms of results announcements for the June quarter. Some of the big results expected during the week include SBI, HDFC, ITC, Tech Mahindra, Hero Moto, Eicher, UPL, Bharti Airtel etc. These will impact markets.

· Being the end of the month, the usual macro data flows will be coming through. The Core sector numbers, the Markit PMI Manufacturing and the monthly auto numbers will have an impact in the coming week on the markets.

· Finally, there are going to be some important global data flows coming this week. These include, progress on the US China trade talks, Balance of Trade data for the US, Euro Area PMI and retail sales, Japanese retail sales, Bank of Japan interest rate decision etc.