RBI meet, auto sales among 8 key factors that may guide markets this week

Both benchmark indices rallied close to 3 per cent during the week and this was their best weekly performance in quite a few months. Broader markets- midcap and smallcap indices- gained over a per cent each.

Among the sectoral indices, metals shone the most with a 8 per cent rally, whereas IT, reality and media stocks were the other standout performers.

Ajit Mishra, VP – Research,

Broking, said that participants should align their positions accordingly and look for buying opportunities on dips. All the sectors are contributing to the move.

“We believe the focus should still be on the top performers rather than expecting a turnaround in the beaten-down names,” he added. “We reiterate our preference for auto, FMCG, banking and financials and remain selective in others.”

Below are the eight key factors that may guide markets this week:

RBI Monetary Policy meet

Led by the governor Shaktikanta Das, the Monetary Policy Committee’s (MPC) meeting has been rescheduled to take place during August 3-5 instead of August 2-4 announced earlier.

Upasna Bhardwaj, Chief Economist,

, expects RBI to hike repo rate by 50 bps in the upcoming policy, whereas BofA Securities expects 0.35 per cent hike in the key repo rate at its meeting.

Auto sales numbers
The Indian automotive industry is expected to see robust demand in July across all segments, except for the tractor segment, says a report by

.

The passenger vehicle segment is expected to see healthy demand driven by a large order book and ramping up of production by automakers as the chip shortage issue wanes. The two-wheeler segment is expected to be in the green.

Q1 earnings
The earnings season for India Inc will continue its momentum as numbers investors’ favorites, including blue chips like ITC, UPL,

, GAIL (India), Titan and M&M, will announce their results for the quarter ended June 30, 2022, .

Varun Beverages,

, Kubota, , , Bosch, , , , Godrej CP, , , Nykaa and are some of the other prominent names due to release their Q1 numbers.

PMI numbers

In the upcoming week, the Purchasing Managers’ Index or PMI numbers for India will be announced which will give an insight into global growth, inflation and labour market trends in key economies for the month of July.

June’s PMIs growth hinted at a deteriorating economic environment, showing business activity falling in the US and Eurozone as the cost of living crisis and tighter monetary policies hit demand.

GST collections
The ministry of Finance, on behalf of the government of India, will announce its collections from the goods and services tax (GST), which was in a buzz lately after the GoM hiked the rates on packaged food items of daily utility.

GST collections rose 55.8% year-on-year to Rs 1,44,616 crore for June (for sales in May), the second highest level since the July 2017 rollout of the indirect tax regime, according to data released by the ministry.

Foreign flows
Global investors turned net buyers in the month of July, which was a major surprise for the street after relentless selling for more than two quarters. The direction of global investors will also guide the movement of the markets in these turbulent times.

Weakness in Rupee

After hitting the 80 level, the Indian Rupee scripted a quick recovery as the US Dollar and has remained stable lately. The weakness in US GDP and softer tone from the Fed has supported the domestic currency. However, the movement of rupee against the greenback will be a key factor to determine selling pressure in the equity space.


Technical Outlook

The bulls have made a strong comeback. Seasonally, July has been the second-best month for the markets. Such a closing will not disappoint the bulls in the least, says Apurva Sheth, Head of Market Perspectives, Samco Securities.

“One should remove some bets from the table now,” he added. “The trend is still optimistic, and investors can seek entry points around 16,800 and 16,600 levels.”