In the last trading week (ended on 15/7/22), benchmark indexes of the Indian equity market, NIFTY 50 and BSE Sensex suffered considerable losses due to volatile negative market sentiments in the global market and the strengthening of the US dollar against the Indian rupee.
NIFTY 50 lost 171.40 (-1.06%) to close market at 16,049.20, while BSE Sensex tanked 721.06 (-1.32%) to 53,760.78.
Fear of increasing inflation and possible recession in the United States, strengthening of US Dollar against Euro and Indian rupee, and increased sale of stocks by foreign institutional investors resulted in a bad week for investors in Indian stock markets.
In the upcoming trading week (beginning on 18/7/22) there are certain domestic and international factors which might end up driving shares upwards or downwards.
Let us analyse a few factors to keep in mind before the equity market begins on Monday :
Quarter 1 earnings of Indian companies
In the upcoming week, Indian companies such as HDFC Bank, Ambuja cement, HDFC Life insurance corporation, Hindustan Unilever, JSW energy, Ultra Tech cement and Wipro would be releasing their first quarter results.
The financial growth of these companies in the first quarter of this financial year along with the forecast issued by various economic agencies regarding these companies will be of high importance in the upcoming week.
As the majority of the entities which are going to release their financial reports in the upcoming week belong to FMCG and the banking sector, any unexpected earnings or profit reports would heavily impact the market.
European Central Bank would be meeting in the next week when the main discussion would be regarding the current inflation and US dollar Euro exchange crisis.
The inflationary scenario in the eurozone is getting worse daily, along with the Russian announcement regarding the closure of Nord Stream one pipeline for maintenance. The energy cost in European economies is expected to soar to new higher levels.
Any decision from the ECB regarding an interest rate hike would have a long-standing impact on the Indian stock market, as foreign institutional investors would try to park their funds in safe haven economies where inflationary effects in the eurozone wouldn’t affect their holdings.
Monsoon session of the parliament
As the very important monsoon session of the Indian parliament is scheduled to begin on July 18th 2022, the passage of bills and laws in both the houses of the parliament, along with the election of the President of India and vice President of India would grab the attention of the stock market traders.
CPI & Foreign Exchange Reserves
According to a monthly bulletin published by the Reserve Bank of India for the month of July 2022, the inflationary peak in the domestic economy has passed, and the country can now focus on post-pandemic growth.
Along with reports regarding consumer price index, a few days ago, Reserve Bank of India released data for the foreign exchange reserve for the week ended on July 8. According to the report published by the RBI, the foreign exchange reserve of India decreased by 8.062 billion dollars to 580.25 billion dollars.
The performance of the Indian rupee against the US dollar was flawed in the past week, as the rupee touched all-time low levels in different instances.
In the coming week, the decision of the European Central Bank regarding the interest rate Hike and the following performance of the US dollar with the Euro and the Indian rupee would have a significant impact on the Indian stock market.
With quarterly reports of various Indian companies in the loop and significant international events in the upcoming week, from Monday onwards, we can expect a very volatile and competitive trading week.