RBI MPC meeting on US jobs data: 5 factors that could affect the stock market this week

This week’s stock market: Following strong global cues and the return of foreign investors (FPIs and FIIs), Indian stocks ended higher for the third straight session on Friday. Last week, the Nifty 50 index gained 2.62 percent last week, while registering a monthly gain of 8.70 percent in July 2022. Similarly, the BSE Sensex rose 2.67 percent last week while it recorded a monthly gain of 8.50 percent in July 2022. .

“The month of July turned out to be a relief for market participants as after a sharp correction in the previous three months, the Nifty bounced back this month and posted gains of over 8 percent. The move in the ‘rise was led by banking and financial space but ended late. all sectors participated which resulted in a broad rally in the market. Now the Nifty has recovered the 17000 level so we see some data for predict whether the upward movement will continue in the short term or the reverse First, if we look at the derivatives data , rollovers were slightly lower than average and the upward movement in July was mainly due to to a combination of short hedging and long formation. FIIs who were aggressive sellers in the last three months have covered their short positions and have in fact started the August series with net long positions in the futures index,” said Ruchit Jain, Lead Research at 5paisa.com.

“The Nifty Bank index dominated the benchmarks by rising over 12% during the month. The index is now near 37500, which is the potential reversal zone of a bearish harmonic pattern called CYPHER. A upside; 38000 is also bearish reversal zone SHARK Pattern. So we expect profit booking from 37,500 to 38,500 area for next month. On downside, 36,800 to 36,200 could be a support important for next week,” said Mehul Kothari, AVP – Technical Research at Anand Rathi.

After July’s good show on Dalal Street, stock watchers expect a repeat in August as well. However, investors are advised to remain alert to the major triggers that can dominate the stock market movement.

Here are the main triggers that could affect the stock market this week:

1]RBI MPC Meeting: “Markets expect the RBI to raise repo rates by another 50 basis points next week to 5.4% from the current 4.9%. This would underline how the RBI is balancing between taming inflation and promoting economic growth. The RBI governor’s comments will have a game-changing effect on markets next week,” said Sreeram Ramdas, vice president at Green Portfolio.

2]US job details: US nonfarm payrolls and employment data will provide clues about the health of the US labor market and guide the Fed’s monetary policy path.

“US jobs data is an important trigger as US markets closely follow US GDP and US jobs data. As US GDP estimates this week have been disappointing. If the data of the US employment are also disappointing, then it would put the dollar index under immense pressure leading to a strong recovery of the domestic currency and market morale. Therefore, you need to keep an eye on the employment data of the United States which will come next week,” said Anuj Gupta, vice-president, research, IIFL Securities.

3]Bank of England interest rate: “The Bank of England is expected to raise interest rates by another 25 basis points to 1.5 percent next week. Retail sales, mortgage approval rates, deposits consumer spending and consumer confidence have taken a toll due to sky-high inflation in the UK, while consumer borrowing is peaking for the wrong reasons.Further signs of rising interest rates or any surprise comments could further hampering the UK economy,” said Green Portfolio’s Sreeram Ramdas.

4]First quarter results: Almost 1/5 of NIFTY 50 companies across various industries report earnings next week. These impressions will provide insight into the strength of consumer demand and rising demand for automobiles. Earnings for several small- and mid-cap companies that rely heavily on the US are expected to see cooling growth numbers due to the technical recession the US has entered.

5]DII FII date: Although FIIs have remained net sellers during the month of July, they are showing buying interest. If the dollar index and bond yields continue to decline, FIIs are expected to stop selling, in which case Indian stocks may witness a sharp rally as DIIs are already pumping money into the markets,” said Anuj Gupta of IIFL Securities.

Disclaimer: The above opinions and recommendations are those of individual analysts or brokerage firms, and not of Mint.

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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!