Week Ahead: Union Budget 2024, Q1 results, F&O expiry, global cues among key market triggers this week

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.

In the fourth week of July, investors will keenly eye any Union Budget-related or government policy announcements as they may result in stock-specific action. 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.

Also Read: Budget 2024: Rahul Ghose of Hedged.in gives a low-risk trading strategy for July 23; favours infra, IT, railway stocks

Domestic equity benchmarks Sensex and Nifty witnessed minor gains last week, but extended 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 record-breaking rally and the global sell-off triggered by an IT outage that caused devices to crash globally.

Last week, 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 had hit the 81,000-mark for the first time on Thursday.

The NSE Nifty tumbled 269.95 points or 1.09 per cent and ended 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 per cent to 24,508.15. FMCG and IT sectors maintained their upward momentum, while sectors like metal, energy, and media saw declines. 

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

Also Read: Budget 2024 | D-Street experts predict ‘heightened volatility’, suggest caution on profit-booking if Nifty hits 25K

‘’Though the expectation for Q1 earnings has subdued, the above-expected results from the IT majors provide scope for an upgrade in earnings for FY25. This has attracted more foreign inflow to the IT and other defensive large-cap sector pharma and FMCG spaces,'' said Vinod Nair, Head of Research, Geojit Financial Services.

The market direction will be determined by budget outcomes. Investors are anticipating pro-industry and populist measures with prudence on fiscal. If the budget meets the expectation, it will provide more stability in the market,'' added Nair.

In the coming week, primary markets will be under investor's radar as some new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The Budget week will be critical from the domestic and technical point of view as investors will track corporate results, Union Budget 2024, and macroeconomic data.

Overall, market analysts say that despite the overall positivity, increased volatility is anticipated in the subsequent sessions due to the monthly F&O expiry rollover scheduled this week. Nifty 50 has support at 24,150. Experts advise traders to opt for hedged trades and focus on index majors.

Here are the key triggers for stock markets in the coming week:

Q1 Results, Union Budget 2024 

In the coming week, 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, JK Cement, among few others are 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) , Cipla, among others will announce their Q1FY25 results this week.

Looking ahead, 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, 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.

Also Read: Expert View | Budget 2024 to boost domestic cyclicals, traders must avoid knee-jerk reactions: Alchemy’s Alok Agarwal

The upcoming Union Budget on July 23, 2024, has become the next focal point for the market, with high expectations for growth-oriented policies. ‘’India’s union budget in July is a key event, with hopes pinned on growth-oriented policies and the development of the monsoon season, which will also be significant points of interest for investors and traders,'' said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.

8 new IPOs, 8 listings to hit 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. 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, 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. 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, as they bought equities worth of ₹10,946 crore, while domestic institutional investors (DII) sold equities worth ₹4,226 crore. Foreign portfolio investors (FPIs) also extended their buying streak and have pumped ₹30,772 crore in equities this month so far. The net investment value including debt inflow stands at ₹40,332 crore.

"FPIs were consistent buyers in July so far with buying picking up during the week ended 19th July. Investment in debt during this period stood at ₹13,573 crore. During the fortnight ending 15th July FPIs were buyers in autos, capital goods, healthcare, IT, telecom and oil and gas,'' said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Also Read: Expert View | Budget 2024 to expand PLI; traders must follow staggered investment: Master Capital’s Gurmeet Chawla

‘’A notable trend was the lack of buying in financial services, which partly explains the poor performance of financial services in July so far. If the recent trend of weakness in dollar and bond yields persist FPIs are likely to continue their buying in the market. Domestic and foreign investors are keenly watching for possible tweaks in the long term capital gains tax in the Budget to be presented on 23rd July,'' added Dr. V K Vijayakumar.

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. 

‘’These figures are critical for the Fed’s policy decisions. Stay ahead of the game by closely monitoring these events and adjusting your strategies accordingly,'' said Alex Volkov, Market Analyst at VT Markets.
 

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 per cent, to $82.63 a barrel. US West Texas Intermediate crude futures dropped $2.69, or 3.3 per cent, to $80.13. Regarding domestic prices, crude oil futures last traded 3.46 per cent lower at ₹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, Power Finance Corporation Ltd, among several others will trade ex-dividend. Check full list here

Technical View

According to Ajit Mishra – SVP, Research, Religare Broking Ltd, market reactions will hinge on earnings reports from major players like Reliance Industries and HDFC Bank early in the week, before shifting focus to the Union Budget. Increased volatility is anticipated in subsequent sessions. 

‘’Key support levels for the Nifty are seen at 24,150 and potentially 23,700, with resistance likely at the 24,800-25,000 range in case of a rebound. Given mixed signals and heightened volatility, a defensive stance focusing on FMCG, pharma, and IT sectors, particularly major index stocks, is advisable. It's also prudent to have exit strategies in place, especially for overbought themes like defense, railways, and other PSUs, should further declines occur,'' said Mishra.

Also Read: Dividend Stocks: HCL Tech, Fortis Healthcare, RBL Bank, among others to trade ex-dividend next week; Full list here

Market experts also noted that the Nifty index has formed a shooting star candle on the weekly charts, suggesting a potential reversal from the recent upward trend after making an all-time high of 24854.80. 

‘’A break below support levels could signal continued bearish momentum and potential further declines. On the upside, the resistance zone is between 24,850 and 24,900. The key indicator RSI starts declining from a level of 75, indicating that the index is moving out of the overbought territory and may be due for a correction or a pullback,'' said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd noted that Nifty has shown its first signs of weakness after a significant vertical rise, forming a bearish engulfing candlestick on the daily chart. 

‘’However, to confirm a reversal, we need follow-up selling. A decisive move below 24,500 can lead to further weakness, potentially driving the index towards the 24,000-23,650 range. On the upside, the 24,800-25,000 range will act as a supply zone. A move above 25,000 could signal a continuation of the rally,'' said Gour.

Bank Nifty has been trading within a range since June 20th, indicating a period of consolidation. The immediate support levels are 51,800 and 51,100. A break below these levels could signal further downside momentum and potential declines. 

‘’On the upside, the resistance zone is between 52,850 and 53,400. If the index breaks mentioned supports, consider adjusting strategies to sell or short the market. Conversely, if Bank Nifty remains above these support levels and heavyweight results are positive, it could lead to a breakout from the current range,'' said Nanda.

However, Gour believes that there is an immediate and crucial support level at 52,000 for Bank Nifty. ‘’A decisive move below this level can lead to further weakness towards the 51,000 mark. On the upside, the 52,800-53,000 range serves as a critical resistance zone. A breakout above this level could trigger a rally towards the 53,500-54,000 range,'' he said.
 

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.