InvestorQ : What are the major trading and investment cues for the week commencing on 22nd July 2019 and what factors to watch out?
Aashna Tripathi made post

What are the major trading and investment cues for the week commencing on 22nd July 2019 and what factors to watch out?

Tisha Malhotra answered.
3 years ago

The week commencing 22nd July is going to be critical because it is expected to be a mix of domestic and global cues. Here are some of the major cues to watch out for in the current week.

· FPI selling could be the main sour point in the markets in the coming week. The FM has already clarified that she was unwilling to make any special concessions for the FPIs structured as trusts and they would have to pay the super-rich tax if applicable. Not surprisingly, FPIs have sold equity worth nearly $1.2 billion since the Union Budget.

· The Indian market will be closely watching the cues from the cues on the rate cut ahead of the July 31st Fed meet. Fed Boston chair has opposed the rate cut in the current scenario considering strong macro numbers. Even if the rate cut ends up at 25 bps instead of 50 bps, it would still be a disappointment.

· The CME FEDWATCH tool will be closely watched by the markets during the week. The FEDWATCH calculates the real time probability of the quantum of rate cut. As of last week there was 100% probability of a rate cut and 50% probability of a 50 bps rate cut. Any reduction in this optimism will impact Indian markets.

· Obviously, the Middle East geopolitical situation will hold the key to the markets. Last week, Iran seized two tankers captained by a British national. That could be a flashpoint for a limited confrontation in the Middle East and that is not good news for oil prices as the Strait of Hormuz in the Persian Gulf is the route for nearly 30% of global oil and LNG movement.

· The air traffic volume in June picked up to 6.2% and that is likely to be a positive for airline stocks. However, Jet is not operating any longer and Indigo seems to be grappling with its own internal management issues. The impact may not show up immediately although the sentiments on the consumer front should be positive.

· The markets are likely to react to the Reliance results in this quarter. On the telecom front, the company has seen good traction although it has come at the cost of ARPUs. The GRMs in the refining business came in at $8.10/barrel but that is lower than last quarter and sharply lower than last year. However, the premium over Singapore benchmark is a positive. The only worry is the petchem business where the growth in sales and profits has been negative. Markets could react to that.

· Two banks came out with impressive results on Friday but the real story for the markets could be on the NPA front. For example, HDFC bank reported marginally higher gross NPAs and in the case of RBL Bank there was a sharp rise in provisions and also in spillages. This could be an overhang for the private banks space. This will only add to the concerns on the earning front.

· More than 30 companies are expected to report numbers on Monday and a string of important results are expected during the week. On Monday itself, there are key results of companies like Kotak Bank, ICICI Securities, TVS Motors, and United Spirits etc. This could also have a bearing in the markets.

· The Forex reserves fell by $1 billion in the latest week and that is quite surprising considering that the RBI has not had to support the rupee too much. That could be an overhang on the rupee, which has already weakened in the last week from 68/$ to near 69/$ on FPI outflow concerns.

· Lastly, keep your eyes on the F&O expiry on Thursday ahead of the all important Fed meet and the RBI policy meet in early August. This may induce traders to play it safe on expiry and avoid too much of exposure.