NEW DELHI: Volatility continued to grip Dalal Street during the week gone by, but the bulls emerged triumphant at the end. Investors largely appeared resilient to trade war tensions, as the US officially pushed the button early Friday and imposed the first import duties on $34 billion worth of Chinese goods.
For the week, the S&P BSE Sensex added 0.66 per cent to settle at 35,657 while NSE's Nifty50 ended 0.54 per cent higher at 10,772.
Going into the next week, June quarter earnings and global factors will be key determinants of market movement.
Heres a close look at the potential market drivers for the week ahead:-
Earnings season kicks off
India Inc will start releasing June quarter numbers from next week. IndusInd Bank and TCS are slated to declare their Q1 results on Tuesday, July 10, while Infosys is scheduled to release its on Friday, July 13. Brokerages believe the IT sector is expected to show accelerated growth after six quarters, helped mainly by currency tailwinds. "We expect divergent growth trends within Tier-1 IT with HCL Tech and TCS posting stronger growth, whereas Wipro and Tech Mahindra expected to post a sequential decline," HDFC Securities said in an earnings preview.
IIP data on July 12
The government is expected to announce May industrial production data on Thursday, July 12. Indias industrial activity gained pace in April led by manufacturing and mining activity. The index of industrial production rose 4.9 per cent in April over a year ago.
Progress on monsoon
Heavy rains hit parts of Maharashtra, Gujarat, Goa and Karnataka on Saturday. According to a report by Skymetweather.com, rainfall activity will enhance over Odisha and Chhattisgarh. Moderate to heavy rainfall will also continue over central India. Pockets of Jammu and Kashmir, Himachal Pradesh and Uttarakhand may receive short spells of rain. Down South, an offshore trough is likely to enhance rains. This should boost confidence of investors, who were earlier discouraged a sudden slowdown in monsoon progress.
After the trade war kicked off officially on Friday, the Chinese Commerce Ministry said the country was forced to retaliate in order to defend the core interests of the country and the people. In response to this, US President Donald Trump has threatened to tax Chinese goods worth $500 billion, roughly the value of all US imports from China in 2017. Investors across the globe are expected to monitor these developments closely.
US jobs data
The US economy created more jobs than expected in June. Non-farm payrolls rose by 2,13,000 jobs last month as manufacturers stepped up hiring, Reuters reported quoting the US Labour Department. The economy added 37,000 more jobs in April and May than previously reported. Steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year, the report said.
US President Donald Trump is expected to meet with United Kingdom Prime Minister Theresa May next week. Trump would like a quick trade deal with Britain once Brexit is finished, the US ambassador to Britain said on Friday. The trip has been on-again, off-again for several months as the Trump administration expressed concern over the growing prospect of demonstrations and protests during his visit to London.
The Nifty50 index on Friday formed what resembled a 'Shooting Star' on the daily chart. A larger picture shows that the sideways activity over last few weeks has formed a distribution triangle. The last leg of the triangular pattern seems to be near its maturity. On the higher side, 10,800-10,860 proved to be a key hurdle zone and is likely to do so going ahead, says Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas. "Thus, from a trading perspective, one should be looking to create short positions. On the downside, the Nifty is expected to test the May low of 10,417 in the short-term," Ratnaparkhi says.
Crude prices and movement of rupee against the US dollar will also influence investor sentiment.
Besides, China's inflation data for June is slated to release on July 10 while US core inflation data for June will be declared on July 12. This apart, movement of crude prices will be watched closely.