Market Outlook and Key Financial Developments

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Development on these factors to dictate the trend – Weekly Market Newsletter

Market Overview

The global markets continued to march ahead on the back of improving macro data in the US and Europe and better than expected earnings announcement.

The optimism was despite the stalling of stimulus talks between Democrats and the government.

Further, Trump’s executive order of banning US transactions with Tencent’s We Chat and Bytedance’s Tik Tok kept investors nervous.

Back in India, the equity markets rebounded this week led by support from global markets, better than expected auto sales numbers, key announcements by HDFC bank, and dovish RBI policy.

The demand in the auto continued to witness recovery in the month of July with tractors leading the show and two-wheelers and PVs seeing signs of normalcy.

Also, HDFC bank announced that RBI has approved the appointment of Sashidhar Jagdishan as the next managing director of the bank, putting rest to all speculations and uncertainty.

Despite no rate cut, the RBI policy was a dovish one as it allowed the restructuring of loans for MSMEs, announced a resolution framework for COVID-19 stress, and a hint of more rate cuts going forward.

In the midst of all, the markets chose to ignore the weak PMI manufacturing and services data and elevated inflation outlook.

Nonetheless, Nifty and Sensex closed with healthy gains of 1.3% and 1.2%. The rally was not only confined to select large-caps as the broader market witnessed strong buying interest as both the midcap and smallcap indices ended higher by 3.3% and 5.0%.

Fund flow wise, FII were net buyers to the tune of Rs. 9,500 cr whereas DIIs sold stock worth Rs. 2,100 cr.

Market Outlook

After the negotiations broke down between the White House and the Democrats, Donald Trump signed an executive order on August 8, restoring enhanced unemployment payments to the tens of millions of Americans who lost jobs in the pandemic.

This could lift the sentiments for the markets. On the flip side, the US-China trade tensions have yet again escalated recently and updates on this front would be one of the key monitorable for the markets.

On the domestic front, on Monday (August 10), the Supreme Court would be hearing the AGR case and stocks like Bharti Airtel and Vodafone Idea would be the focus along with some of the banking names as well (which have high loan exposure to these companies).

Moreover, key macro data like IIP and CPI would remain in focus especially the CPI numbers as inflation has inched up meaningfully in recent months.

The earnings announcement from companies like Glenmark Pharma, Ashok Leyland, Akzo Nobel, V-mart Retail, Natco Pharma, Aurobindo Pharma, Cummins, Cholamandalam, Shriram City Union, Bosch, and Bank of Baroda would be in focus.

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Monergise helps you stay updated with the current trends and make better investment decisions. All the articles are written by a group of finance professionals having experience of more than 10 years in Indian markets.
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