Weak Ahead: Fed speech, US & Indian manufacturing PMI data, global cues, among key market triggers next week

The pattern suggests that if Nifty surpasses and holds above 24,200, it could attract buying interest, pushing the index towards levels of 24,500-24,700, said analyst.

Indian markets have been rallying since the election results. Both NIFTY50 and SENSEX have made substantial gains, surging over 7% so far this month. With the election results now settled, investors are turning their attention to other key factors that could influence the markets in the coming week. Investors will closely watch any Union Budget-related or government policy announcements, as these may trigger stock-specific actions. Market movement this week will be influenced by domestic and global macroeconomic indicators, foreign fund inflows, crude oil prices, and global cues. “Indian benchmark indices recorded gains this week despite mixed signals from the global market, particularly regarding inflation concerns. Investor attention was predominantly on large-cap stocks, resulting in underperformance of mid and small-cap segments. The IT sector especially showed notable recovery along with private banks which outperformed public sector banks in the banking segment,” said Vinod Nair, Head of Research, Geojit Financial Services. On the weekly front, the market experienced a strong rally, reaching a new closing high, despite some profit-taking on June 28, the first day of the July series. Nifty surpassed the 24,000 mark, however, after a continuous rally, the index looks a bit heavy and might attract profit booking if Nifty sustains below 24,000. Meanwhile, the Bank Nifty index experienced its first meaningful correction after a nonstop rally in the past week. For the selling pressure to continue, there needs to be follow-up selling; otherwise, the index may get stuck in a consolidation range. The cement and telecom sectors were in the limelight during this week, and the news flow of Ultratech’s acquisition of a non-controlling stake in India cement led to an expectation of further consolidation in the sector. On the other hand, telecom players are set to increase their tariff rates, which could boost their average revenue per user and profitability. “The outlook for the market will be guided by the major domestic and global economic data such as HSBC India Manufacturing PMI, HSBC India Services PMI, S&P Global Manufacturing PMI (Jun), ISM manufacturing PMI, Fed speech, JOLT Job opening data, ADP Nonfarm Employment Change, Initial Jobless Claims , Unemployment Rate decisions will guide the market next week,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd. Nanda further said, “The pattern suggests that if Nifty surpasses and holds above 24,200, it could attract buying interest, pushing the index towards levels of 24,500-24,700. Conversely, a drop below 23,800 could lead to selling pressure, potentially driving the index towards 23,600-23,400 levels. For the upcoming week, we anticipate Nifty to trade within the range of 24,600-23,600 with a positive bias. Both daily and weekly strength indicators like the RSI are trending upwards and are above their respective baseline levels, further supporting the bullish outlook.” Here are the key triggers for stock markets in the coming week: Federal Reserve Chairman Jerome Powell's upcoming speech on Tuesday, July 2, 2024, is anticipated to exert additional influence on market sentiments. US and India are expected to release their monthly manufacturing PMI data next week which will be a c trigger to the Indian stock market. The primary market will take a breather as only three new initial public offerings (IPOs) are expected to open for subscription, to raise approximately ₹ 2,208 crore this week. D-street will witness opening of Emcure Pharmaceuticals IPO and Bansal Wire Industries IPO in the mainboard segment. Meanwhile, in the small and medium enterprise (SME), only Ambey Laboratories IPO will be raising over ₹ 44 crore. On the other hand, around eleven IPOs are expected to get listed on Indian bourses next week. Despite election-related concerns, foreign institutional investors (FIIs) have purchased Indian stocks amounting to approximately ₹ 26,565 crore in June—prior to the Union Budget and India's inclusion in JP Morgan's bond index. After being net sellers in the preceding two months, FIIs' reversal of stance coincides with expectations of ongoing reforms post-elections. Analysts attribute this shift to improved GDP growth forecasts and robust earnings reported by Indian companies, which have bolstered the attractiveness for FIIs. “FPI’s investment of ₹ 26565 crores in equity in June marks a reversal of their strategy of selling in the two preceding months. Political stability despite the BJP not getting majority on its own, and the sharp rebound in markets aided by steady DII buying and aggressive retail buying, has forced the FPIs to turn buyers in India. It appears that FPIs have realised that selling in the most performing market would be a wrong strategy. FPI buying can sustain provided there is no sharp up move in U.S. bond yields,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. he debt inflows for 2024 so far stands at ₹ 68674 crores. In the long term this will reduce the cost of borrowing for the government and reduce the cost of capital for corporates. This is positive for the economy and therefore for the equity market. First fortnight data in June from the NSDL shows FPI buying in realty, telecom and financials. FPIs were sellers in IT, metals and oil and gas. The FPIs are likely to continue the buying trend in financials." On the global front, the rise in US jobless claims and weak housing data have raised expectations of a rate cut in September. For the week ahead, focus will be on the release of US & Indian manufacturing PMI data and the FED Chair’s speech. The undercurrent is positive, with no major risk visible for the domestic market in the short term. All eyes will be on the union budget proposals which will dictate the market in the medium term. Early in Asian trading hours on Friday, oil prices climbed, marking a third consecutive weekly increase. Escalating geopolitical tensions and weather-related disruptions overshadowed indications of weak demand. Brent crude futures for August, set to expire Friday, edged up 15 cents or 0.2% to reach $86.54 per barrel by 0020 GMT. Meanwhile, the September Brent contract also rose by 0.2%, reaching $85.44 per barrel. U.S. West Texas Intermediate crude futures for August delivery increased by 24 cents or 0.3%, reaching $81.98 per barrel. Despite signs of reduced demand from the United States, the largest oil consumer globally, oil prices continued their upward trend. This was attributed to escalating tensions between Israel and Hezbollah in Lebanon, which could potentially escalate into a broader conflict involving major oil-exporting countries like Iran in the Middle East. The coming week is packed with corporate activity as stocks of numerous companies will trade ex-dividend, ex-split, and ex-bonus. Several companies including Mahindra & Mahindra, Piramal Enterprises , Tata Power , among others are trading ex-dividend in the coming week. Check full list here . The Nifty has ended the June series with a significant gain of 7% amidst volatility. It turned out to be the best series in the current calendar year, fuelled by the BJP-led coalition forming the government for the 3rd consecutive term, according to analysts. “The NSE Small-cap index and the NSE Mid-cap index outperformed the Nifty by ~2.4% and 1% respectively. The ratio of NSE Mid-cap index over the Nifty closed at 2.3082 levels as against its all-time high levels of 2.3612 as observed on June 24, 2024. The Nifty rollover stands at 76%, higher than its last 3-series average of 69%. Cumulative future open interest stands at 15.1 million shares, highest open interest observed on the day of inception in the last 2 years. The Bank Nifty rollover stands at 71%, lower than its last 3-series average of 76%. The series has started with a cumulative future open interest of 2.7 million shares as against its last 3-series average of 3 million shares,” said Neeraj Agarwal, Technical & Alternative Research at JM Financial. The next target for Nifty is 24,500 level with 23500 zone maintained as the support as of now. “The Nifty witnessed a robust move during the week with four consecutive sessions of strong positive candle formation to scale 24000 for the first time and is anticipated for further rise in the coming days with bias and sentiment maintained strong. The index would have the next target of 24500 level, as mentioned earlier, with 23500 zone maintained as the support as of now. BankNifty scaling 53000 zone for the first time has created history with most of the frontline banking stocks well poised for further upward move and has the next targets of 53500 and 55100 levels visible in the coming days. The support for the day is seen at 78800/23900 levels while the resistance would be seen at 79700/24200 levels,” said Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt. Ltd. Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.