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Fed interest rate decision, earnings, global trends to drive equities this week: Analysts

Due to a number of variables, including the US Fed rate decision, the expiration of monthly options, and the release of results by index companies, domestic stock markets are predicted to experience considerable volatility this week, according to analysts.

July 24, 2022 / 10:44 AM IST
Representative Image

Representative Image

Domestic stock markets are expected to see high volatility this week due to a host of factors such as US Fed rate decision, monthly derivatives expiry and announcement of results by index companies, analysts said. Foreign investment and trends in global markets and movement of the rupee as well as crude oil would impact the market sentiment, they said.

"This week is going to be an event-heavy therefore we can expect spike in volatility," said Santosh Meena, Head of Research, Swastika Investmart Ltd. "Apart from this, many Nifty-50 companies will announce their Q1 earnings during the weekdays. We will have July month F&O expiry on Thursday which may also lead to volatility in the overall market," Meena added.

On the global front, the US FOMC (Federal Open Market Committee) meeting outcome on 27th July will be the most critical event he said, adding that movement of the dollar index and crude oil prices will be other important factors. It will be interesting to see foreign institutional investors (FIIs) behaviour because, after a long time, they become net buyers for the week, Meena added.

"This week is action-packed as we have several important data and events lined up. First, participants will react to results of index heavyweights like Reliance, Infosys, ICICI Bank and Kotak Bank in early trades. On the global front, the US Fed decision on interest rate on July 27 and US GDP data on July 28 will be closely watched," Ajit Mishra, VP – Research, Religare Broking Ltd, said. Reliance Industries on Friday reported a 46 per cent jump in its June quarter net profit on bumper earnings from oil refining as well as an uptick in telecom and retail businesses.

ICICI Bank on Saturday reported a 50 per cent jump in standalone net profit to Rs 6,905 crore in the first quarter of the current fiscal aided by a decline in bad loans. Kotak Mahindra Bank on Saturday reported a 26 per cent rise in its net profit to Rs 2,071.15 crore in the first quarter of the current fiscal year helped by a decline in bad loans.

As the earnings season would gain pace, we have a long list of prominent companies who will be announcing the results this week, Mishra said. Axis Bank, Tata Steel, Asian Paints, Bajaj Auto, Larsen & Toubro, Maruti Suzuki, Tata Motors and HDFC are some of names from that list, he added. "On the global front, the US Fed meeting and US Q2 GDP data would be key events to watch out for," said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Last week, the 30-share BSE benchmark jumped 2,311.45 points or 4.29 per cent. "Indian equity benchmark indices gained more than 4 per cent last week with positive closing each day thanks to buying by FIIs, recovery in global market, some cool off in dollar index and commodity market, easing inflation fear and better-than-expected Q1 earnings so far," Santosh Meena said.

Apurva Sheth, Head of Market Perspectives, Samco Securities, said, "This week will be action-packed with activities. The FOMC meeting and press conference will take the centre stage. Besides that, the release of the United States' GDP figures would have an impact on market sentiment. In Indian markets one can expect some volatility as we approach the monthly expiry."

first published: Jul 24, 2022 10:44 am