InvestorQ : What are the major trading / investing cues for the week commencing from July 08 in the stock markets?
Lavanya Subramanian made post

What are the major trading / investing cues for the week commencing from July 08 in the stock markets?

ishika Banerjee answered.
2 years ago

Obviously, the week will be dominated by the market reaction to the Union Budget because the markets may not have had the requisite time to digest the fine print of the budget document. Over the weekend, there would have been a better understanding of the budget implications. Let us look at some key drivers for the market in the coming week.

· The impact of the proposed increase in public shareholding will continue to be felt in the week ahead. The 3 stocks that could see the maximum dilution to stock to meet the 35% public shareholding criteria are TCS, Wipro and Avenue Supermarts (owners of D-Mart brand). These stocks will continue to see pressure.

· There are some key quarterly results that are expected in this week. While TCS will set the tone on 09 July, two more important companies; Infosys and IndusInd Bank will follow on 12 July. Even Avenue Supermarts is expected to announce its quarterly results in the week ahead.

· The rupee strength could be the key factor to watch out for in the coming week. The rupee in the previous week had strengthened well below the 68.5/$ mark. However, the budget has announced a $10 billion sovereign bond issue by the government that has currency risk. That will lead to inflow of dollars which could further strengthen the rupee. Sentiments will be positive on the rupee.

· Crude oil will be an interesting point to watch. Last week, the price of crude had closed at $64/bbl and it could be subjected to the twin pressures of global weakness in growth and the impact of the OPEC supply limits. US supply and inventory position will also impact the oil prices.

· The all important CPI inflation data for the month of June will be released on 12 July. The CPI had touched 3.05% in May and the markets could bet on a higher inflation rate considering the higher food price impact due to weak monsoons. That could impact bond yields in the week.

· The IIP (index of industrial production) for the month of May 2019 will also be announced on 12 July. While it had shown a recovery to 3.4% in April, it needs to be seen if IIP can get above the 4% mark.

· From a technical standpoint, the level of 12,000 on the Nifty and 40,000 on the Sensex will continue to be the resistance points as we have repeatedly seen in the last few weeks. The options accumulation of calls is also hinting at resistance at 12,000 on the Nifty and that option cluster has not yet shifted up.

· On the global front, there will be two important cues during the week. The US consumer inflation expectations for June will be announced during the week and that could have a major impact on the rate action by the Fed in July. Secondly, the testimony of the Fed chair, Jerome Powell, will also be released which will give an insight into the thinking of the Fed on monetary policy.

· Lastly, some of the key announcements made last week pertaining to higher surcharge on the super income earners and the tax benefits on electrical vehicles and affordable homes will drive specific stocks. Also look for a widening of the valuation gap between the stronger NBFCs and the weaker NBFCs.