Global factors, crude oil, macro data among key factors driving market this week

In the week gone by, the benchmark indices settled with marginal gains amid relentless selling by FIIs, falling rupee and inflationary pressures. The BSE Sensex surged 179.95 points or 0.34% to 52,907.93 during the week ended July 01, 2022 and the Nifty surged 52.80 or 0.34% to 15,752.05.

Markets made an optimistic start to the week as sentiments got a boost with Commerce and Industry Minister Piyush Goyal’s statement that India is one of the fastest-growing economies in the world and it is expected to reach $30 trillion in the coming 30 years.

However, markets took U-turn from thereon and wiped out most of the weekly gains as inflation and recession fears hurt sentiment. Some cautiousness came in with a private report that after a gap, the prices of select varieties of pulses have started rising for the past few days due to a delay in the onset of the southwest monsoon over major growing regions of Madhya Pradesh, Maharashtra, and Gujarat. Some concerns also came after the Reserve Bank of India (RBI) in its latest data showed that the growth in Scheduled Commercial Banks (SCBs) deposits moderated to 10 per cent year-on-year in March 2022, compared to an increase of 11.9 per cent a year ago.

On Friday, Shares of oil refining and marketing companies also tumbled sharply after the Ministry of Finance increased export duties on select petroleum products and announced additional windfall tax on gains made by domestic refineries.

The union finance ministry issued a notice on Friday, increasing export duties on petrol, diesel and aviation turbine fuel (ATF). The Government imposes a cess of ?23,250 per barrel on domestic crude production.

Also, the rupee rebounded from it’s all-time low to close 12 paise higher at 78.94 (provisional) against the US dollar on Friday. “The Indian government’s effort of tightening exports of oil and imports of gold fell short to change the market mood as the participants remained worried about capital outflows, risk-off sentiments and widening deficit,” said Dilip Parmar, Research Analyst, HDFC Securities.

“There is selling exhaustion at lower levels as the market is bouncing back from every intra-day dip amid headwinds like fall in global markets, rupee weakness, and windfall tax on domestic refineries. FIIs are still selling but the momentum has come down significantly, therefore, bulls will look for a relief rally if global markets remain stable. Crude oil prices, dollar index and rupee movement will be other dominating factors,” said Santosh Meena, Head of Research,

.

The coming week would also be a crucial one as this marks the start of a fresh earning season, with information and technology service major,

announcing its first quarter results on July 08, 2022. Additionally, investor’s would also await the release of S&P Global Services PMI on July 05, S&P Global India Services PMI increased to 58.9 in May 2022, the highest since April 2011, from 57.9 in April.

On the global front, investors would be eyeing few economic data from world’s largest economy, United States (US), starting with Factory Orders MoM on July 5, followed by MBA Purchase Index, Redbook, S&P Global Services PMI Final, FOMC Minutes on July 6, Balance of Trade, Initial Jobless Claims on July 07 and finally Baker Hughes Total Rig Count on July 08.

“This week marks the beginning of the earnings season and IT major TCS would announce its numbers on July 8. Participants will be closely eyeing its results for any change in the guidance amid fears of a global slowdown. Besides, performance of global indices, crude movement and updates on the ongoing tussle between Russia and Ukraine will be in focus,” said Ajit Mishra, VP – Research,

Broking Ltd.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said the short-term trend of Nifty continues to be range-bound. “But Friday’s sharp upside recovery from the lows hints at the possibility of more upside for the market ahead. A sustainable upmove only above 15,900-15,950 levels could bring bulls back into the market and that could possibly pull the Nifty towards the next upside levels of 16,200-16,300 levels quickly. Immediate support is placed at 15,630,” he said.

Gaurav Ratnaparkhi of Sharekhan said even as the index started the week on a strong note, it could not build upon the gains.

“It witnessed consolidation throughout the week. Near term support zone was placed around 15,700-15,650, which the index breached on July 1. However, it received support near 15,500. Overall structure shows that the index is likely to witness consolidation in the range of 15,500-15,900 in coming sessions,” Ratnaparkhi said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)