InvestorQ : What are the major data flows that you see impacting markets in this week?
Arusha Ray made post

What are the major data flows that you see impacting markets in this week?

4 weeks ago

For the current week stretching from 11 July to 15 July, it is likely to be a data heavy week with a mix of domestic and international data flows. Here are some of the key data flows to watch out for and how they can have an influence on the markets overall.

1) The results season has just about started and so that will be the fist big trigger in the current week. After TCS results last week, there will be several big names coming out with numbers this week. Some of the key large cap results include; HCL Technologies, HDFC Bank, ACC, Mindtree, L&T Infotech, ICICI Prudential Life and Tata Elxsi. Mid-cap results are LTTS, Spandana Sphoorthy, Delta, Angel One, Butterfly, Bharat Electronics.

2) The big number to watch is the India consumer inflation, which had tapered to around 7.04% in the previous week and is likely to taper further in the current week too. CPI inflation will be announced on Tuesday and it is expected to taper further from the 7.04% levels on the back of sharply lower commodity prices as also a fall in food prices. However, WPI inflation was 15.8% last month and that comes out on Thursday.

3) The all-important index of industrial production (IIP), growth for the month of May 2022 will also be also announced on Tuesday. The IIP is normally announced by MOSPI with a lag of one month. This month again it is likely to gain from the base effect after IIP grew at 7.1% in the month of April 2022. However, this is unlikely to impact the RBI policy as the focus for now remains on the inflation trajectory and not so much on growth.

4) The real make or break number would be the US Consumer inflation to be put out on Wednesday. Currently, the US Fed still uses the PCE (private consumption expenditure) inflation for its rate decision, but the US consumer inflation is a decider in the rate stance. US inflation had touched a 40-year high of 8.6% in May 2022 and may have tapered only marginally in June. Fed may be on target to hike by 75 bps in July.

5) Three very related data points must be in focus this week. Brent Crude prices are expected to break out of the range of $100-$110 per barrel, and it is very likely it could be on the downside. However, supply disruptions in Norway and Libya could be a major factor in boosting oil prices higher. Meanwhile, FPI selling still elevated and therefore the Rupee looks all set to get closer to the 80/$ mark. It is already at 79.45/$.

6) With rising trade deficit, the import cover comes into play and so does the fore reserves. The weekly forex reserves data and the trade data for June are likely to be released on Friday 15th July. Trade deficit is expected to touch a record $26 billion with negative implications for current account deficit (CAD). Forex chest has fallen from $647 billion to $588 billion and the rupee defending pressure will keep RBI wary for now.

7) Let me also turn to some key global data indicators for the Indian markets. Key data flows from the US markets include API oil stocks, PPI, jobless claims, EIA natural gas stocks, Retail sales, IIP, Business inventories. Regarding the rest of the world markets, the focus shifts to data points like the European Union IIP; Japan Machinery orders, IIP, PPI; China Q2 GDP, IIP, Retail Sales and the Unemployment Rate.

Markets are already preparing to react to a data heavy week and that will remain the focus for traders and investors.