NEW DELHI: After a week of ups and downs in which the benchmark indices - BSE Sensex and NSE Nifty- fell sharply on Wednesday and Thursday, and then recovered a bit on Friday, experts believe the volatility to continue in the Indian equity market. Among the key factors to watch for, participants will keenly be watching emerging global cues and RBI’s upcoming policy meet, said experts.
In the week gone by, negative news about the US rating downgrade by Fitch and weak economic data from China triggered a sell-off in the Indian market after a four-month-long bull run. The sell-off was intensified by foreign portfolio investors (FPIs) exiting the Indian market owing to a spike in US bond yields and the dollar index. NSDL data shows FPIs sold stocks worth R8,545 crore in the cash market in the last seven sessions while 10-year US bond yield has spiked above 4%, a near-term negative for capital flows to emerging markets.
“If the US bond yields remain high, FPIs are likely to continue selling or at least refrain from buying. FPIs continued to buy autos, capital goods, and financials. A significant change in FPI’s strategy is that they have started buying IT stocks, which they have been selling earlier. This explains the strength in IT stocks recently,” said K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Last week, the BSE benchmark Sensex fell by 438.95 points or 0.66%, and the Nifty dipped 129.05 points or 0.65%.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, said that this week would be crucial from the domestic point of view as RBI is set to announce its interest rate decision. Thus, markets are likely to move in a broader range with some volatility. Interest-sensitive sectors are expected to remain in focus, he added. The outcome of the RBI Monetary Policy Committee (MPC) meeting will be announced on August 10, 2023 and the central bank is expected to maintain its policy rates unchanged at 6.5%.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart, said that as we are heading towards the last batch of Q2 earnings of key companies such as Adani Ports, Coal India, Hero MotoCorp, Hindalco and ONGC, among others, which will lead to stock-specific movement. He added that on the macro front, market participants will be closely observing key events like industrial production and manufacturing production data, which will be released on August 11. DLF, Tata Chemicals, Tata Power, Zee Entertainment Enterprises, Grasim Industries and PSUs such as IRCTC will release their Q1 results this week.