NEW DELHI: After benchmark indices - Nifty and Sensex rallied close to 3% during last week to record their best weekly performance of recent months, all eyes are now on auto sales, RBI monetary policy and the next batch of earnings as bulls are expected to remain in a dominant position.
Nifty and Sensex ended higher by 2.6% and 2.7%, to close at 17,158.25 and 57,570.25 levels, respectively. During the month of July, both the indices rallied close to 9%, its best monthly run in a long time. Ajit Mishra, VP - Research, Religare Broking Ltd, said that markets traded buoyant for the second successive week, largely led by favourable global cues.
To start with, the dovish tone of the US Fed boosted sentiment across markets including India. He added, “The coming week marks the beginning of the new month also so participants will be eyeing crucial data viz. auto sales, PMI numbers and GST collection figures for cues. The highlight would be the MPC (monetary policy committee) meeting after the recent Fed policy and its outcome is scheduled for August 5.”Mishra reiterated his preference for auto, FMCG, banking and financial stocks.
Led by the RBI governor Shaktikanta Das, the MPC meeting has been rescheduled to take place during August 3-5. Most analysts expect the RBI to hike the repo rate by 35 to 50 bps in the upcoming policy. A hike of 75bps may lighten liquidity and impact the recovery of the equity market.
“This week, traders will be busy with domestic cues where the outcome of the RBI policy will be the most important event after the 75 basis rate hike by the US Fed. Apart from this, monthly auto sales numbers and the next batch of Q1 earnings will be other important domestic factors to drive the market. The market will also have an eye on the direction of global markets, crude oil, and the dollar index,” said Santosh Meena, Head of Research, Swastika Investment Ltd.
Technically, the Nifty is in strong bullish momentum and managed to close above its 200-DMA (daily moving average) which has opened the door for the 17700 level however 17330-17475 is an immediate resistance zone, added Meena.