Dalal Street Action In Upcoming Week: From Union Budget To Q1 Earnings; Here Are The Key Market Triggers

The highly-anticipated Union Budget Week is finally here! The Indian stock market's spectacular bull run ahead of the Budget session proved that investor sentiments are firm, driven by hopes of policy announcements, domestic cyclicals, and growth-oriented sectors from the upcoming Union Budget 2024. As the fourth week of July unfolds, investors will eye any Union Budget-related or government policy announcements that may result in stock-specific action. Additionally, the next set of April-June quarter results for fiscal 2024-25 (Q1FY25), domestic and global macroeconomic data, corporate announcements, foreign fund inflow, crude oil prices, and global cues will drive market movement this week.

A Week of Mixed Fortunes
Domestic equity benchmarks Sensex and Nifty witnessed minor gains last week, extending their gaining streak to seven weeks. However, a sharp fall in the previous session erased most of the gains made during the week. On Friday, investors rushed to book profits after four days of a record-breaking rally, and the global sell-off triggered by an IT outage that caused devices to crash globally contributed to the decline.

The rally in the benchmark indices was driven by IT stocks, buoyed by strong performance in Q1FY25 and expectations regarding the US Federal Reserve's interest rate cut. The BSE benchmark hit the 81,000 mark for the first time on Thursday. However, the NSE Nifty tumbled 269.95 points or 1.09%, ending at 24,530.90 after hitting its fresh record peak of 24,854.80 on Friday. During the day, it declined 292.7 points or 1.18% to 24,508.15. While FMCG and IT sectors maintained their upward momentum, sectors like metal, energy, and media saw declines.

On the weekly front, the BSE benchmark climbed 85.31 points or 0.10%, and the Nifty went up marginally by 28.75 points or 0.11%. The drop on Friday trimmed weekly gains to 0.1% for the benchmarks, marking their longest weekly winning streak since January 2018.

Key Triggers for the Coming Week
Quarterly Earnings and Union Budget 2024
Attention will be on quarterly earnings and Union Budget 2024, likely increasing volatility, as per market experts. Investors will be busy analyzing corporate earnings in the coming week as the next batch of Q1FY25 results are set to be released. Shares of Reliance Industries, Wipro, HDFC Bank, Kotak Mahindra Bank, RBL Bank, Yes Bank, Union Bank, and JK Cement are among those likely to react on July 22 as these companies announced their Q1FY25 results either on Friday post-market hours or on Saturday.

Starting from Monday, several major companies, including Nestle India, Axis Bank, Bajaj Finance, Hindustan Unilever Ltd, Larsen & Toubro (L&T), and Cipla, will announce their Q1FY25 results this week. The upcoming week holds significant importance for both equity markets and the overall economy. Finance Minister Nirmala Sitharaman will present the Modi 3.0 government's first budget on Tuesday, July 23, which is expected to largely follow the interim budget. This will be the first budget presented by the PM Modi-led government since it was re-elected for a record third term in June.

IPOs and Listings on D-Street
In the mainboard segment, no new IPOs have been listed for subscription so far. However, among the ongoing ones, Sanstar IPO will close for bidding on July 23. In the SME segment, SAR Televenture FPO and RNFI Services IPO will open for subscription on July 22. V.L.Infraprojects IPO and VVIP Infratech IPO will open for bidding on July 23, while Chetana Education IPO and Manglam Infra And Engineering IPO will open for bidding on July 24. Clinitech Laboratory IPO and Aprameya Engineering IPO will open on July 25.

Among listings, shares of Sanstar will debut on stock exchanges BSE and NSE on July 26. Additionally, on July 22, shares of Aelea Commodities and Three M Paper Boards will get listed on BSE SME, while shares of Sati Poly Plast and Prizor Viztech will debut on NSE SME. On July 23, shares of Tunwal E-Motors will debut on NSE SME, and on July 24, shares of Kataria Industries and Macobs Technologies will debut on NSE SME.

FII Activity
Foreign institutional investors (FIIs) extended their buying last week, purchasing equities worth Rs 10,946 crore, while domestic institutional investors (DII) sold equities worth Rs 4,226 crore. Foreign portfolio investors (FPIs) also extended their buying streak, pumping Rs 30,772 crore into equities this month so far. The net investment value, including debt inflow, stands at Rs 40,332 crore.

Global Cues
Globally, US markets are also undergoing profit-taking after a strong surge, influencing market sentiments, according to analysts. The US market has experienced some profit booking from higher levels as investors take profits from tech shares that have been highly profitable this year. In the upcoming week, significant economic data releases could influence market dynamics, starting with the US Q2 GDP growth rate on Thursday, July 25. A strong GDP reading could delay anticipated rate cuts by the Fed. On Friday, July 26, the US core PCE inflation data will be released.

Oil Prices
Global crude oil prices settled over $2 lower in the previous session at their lowest level since mid-June as investors eyed a possible ceasefire in the Middle East's Gaza. A strengthened US dollar also drove values down further. Brent crude prices settled down $2.48, or 2.9%, to $82.63 a barrel. US West Texas Intermediate crude futures dropped $2.69, or 3.3%, to $80.13. Regarding domestic prices, crude oil futures last traded 3.46% lower at Rs 6,609 per barrel on the multi-commodity exchange (MCX).

Corporate Action
A number of major companies and banks will undergo corporate action in the budget week, with major D-Street stocks trading ex-dividend and ex-split from July 22-26. Shares of United Breweries, Exide Industries, HCL Technologies, MRF Ltd, RBL Bank, JK Tyre & Industries Ltd, Fortis Healthcare, and Power Finance Corporation Ltd, among several others, will trade ex-dividend.

Market analysts anticipate increased volatility in the subsequent sessions due to the monthly F&O expiry rollover scheduled this week. Experts advise traders to opt for hedged trades and focus on index majors.

Overall, the Union Budget Week presents a juncture for the Indian stock market. With high expectations from the Modi 3.0 government's policy announcements, coupled with the ongoing quarterly earnings season, investor sentiments are on a knife edge. The interplay of domestic and global factors will influence market trends, making it imperative for investors to stay informed and strategic in their approach.