India's equity market gained for the third straight week on account of continuous buying by foreign investors, falling crude prices and a good set of quarterly earnings (Q1FY23) reported by heavyweights. These factors overshadowed the emerging US- China tension over Taiwan, and India's central bank (the RBI) decision to hike repo rate by 50 bps.
During the week ending Friday, the BSE Sensex gained more than 800 points to 58,388, and the Nifty 50 surged 239 points to 17,397. The benchmark indices have rallied about 14% in the last one-and-a-half months.
Going forward this week, the domestic market will largely take cues from global markets which are expected to remain volatile. The market will also react to Q1FY23 corporate results and macro data that would be released later during the week . To note, the market will remain closed on Tuesday for Muharram.
"It was the third straight week of gain for the Indian equity markets thanks to continuous buying by FIIs however volatility has jumped at higher levels as the market is a little overbought in the short term, Indices are near important resistance levels, and some geopolitical concerns are there," said Santosh Meena, Head of Research, Swastika Investmart.
Ajit Mishra, VP - Research, Religare Broking Ltd, said that the further escalation of China-Taiwan tension may result in volatile swings while Apurva Sheth, Head of Market Perspectives, Samco Securities, said that on a macroeconomic front, this week is expected to be jam-packed for investors.
"The global markets are likely to dance to the tune of the inflation figures to be released by the United States and China. Back home, market players will turn to the Indian CPI print for hints about the economy's trajectory," said Sheth.
This week market will deal with the last batch of Q1 earnings where the Market will react to SBI, HPCL and BPCL results on Monday while Adani Ports, Bharti Airtel, Powergrid, Coal India, Eicher Motors, Hindalco, Grasim, Heromotocorp, LIC, ONGC, Bata India and Aurobindo pharma would report their quarterly performance during the week.
India will announce its CPI and IIP numbers on 12th August while US inflation numbers are scheduled on 10th August. The CPI inflation was at 7 % in June, after hitting an eight-year high of 7.8 percent in April.The RBI in its policy meeting retained its FY23 inflation forecast at 6.7% and expects it to be below its 6 percent threshold in Q4FY23 and Q1FY24.
The reaction of foreign investors would be another key factor to watch out for. After a long selling streak till late July, foreign institutional investors are on a buying spree. They had net bought nearly Rs 7,000 crore in the week ended August 5, whereas domestic institutional investors net sold Rs 1,766 crore worth shares in the same period.
Technically, the Nifty is trading near the critical supply zone of 17400-17700 where a profit booking is expected, said Meena. However, if the Nifty manages to take out the 17700 level then a move towards 18000 can't be ruled out. On the downside, 17200 is an immediate support level then 200-DMA of 17000 is the next support while 16640 is a critical support level to take fresh long positions.