Indian stock markets are set for a potentially turbulent week, with several key developments likely to influence investor sentiment — including the Reserve Bank of India’s monetary policy decision, Q1 earnings announcements, and continued concerns over U.S.-India trade relations.
Markets in Retreat
The NIFTY50 and SENSEX both ended the previous week in the red, marking their fifth straight week of losses. NIFTY closed at 24,565, down 1.1%, while SENSEX dropped to 80,519, shedding 1.05%. This marks the longest losing streak since mid-2023.
Broader indices continued to underperform. The NIFTY Midcap 150 fell 1.9% and the Smallcap 250 lost 2.9%. These declines reflect growing risk aversion among investors, fueled in part by global uncertainties and foreign outflows.
Key Drivers to Watch This Week
1. RBI Policy Meeting (August 4–6)
The RBI’s Monetary Policy Committee will meet early in the week, with the repo rate currently at 5.50% following a 100 bps reduction in 2025. While some analysts expect the central bank to hold rates steady, others foresee one more cut later this year. The policy outcome will be closely watched for signals on inflation and growth management.
2. Trade Tensions Weighing on Sentiment
U.S. tariffs on Indian goods — currently set at 25% — continue to impact market sentiment. The Indian rupee weakened to ₹87.52 against the U.S. dollar, its lowest level since December 2022, triggering foreign investor selling. Metals stocks were hit especially hard following the U.S. announcement of 50% tariffs on semi-finished copper, steel, and aluminium imports. Stocks like Hindustan Copper, SAIL, Tata Steel, and Vedanta dropped between 4% and 8%.
3. Corporate Earnings in Focus
The Q1 earnings season enters its final stretch with several major companies reporting results this week. Key names include:
- Aurobindo Pharma
- Marico
- Bharti Airtel
- Tata Motors
- State Bank of India
- Titan
- Grasim
- Adani Ports
- LIC
In the U.S., earnings reports from Palantir, Pfizer, AMD, Uber, and Walt Disney could also influence global investor sentiment.
4. FII Positioning and Market Breadth
Foreign Institutional Investors (FIIs) have adopted their most bearish stance in months, with a long-to-short futures ratio of 9:91. Historically, such extreme positioning can precede short-covering rallies, but for now, the sentiment remains cautious.
Market breadth remains weak — only 25% of NIFTY50 stocks are trading above their 50-day moving average. Until that figure improves, any recovery in the index may be limited.
5. Crude Oil Volatility
WTI Crude ended last week with a gain of 2.8%, but prices pulled back after OPEC+ announced plans to raise production by 548,000 barrels per day in September. This move could weigh on oil-related stocks and global inflation expectations.
Technical View
The NIFTY50 index is currently near its 21-week exponential moving average, with immediate support at 24,400 and a deeper support level near 24,000. Resistance remains at 25,200, a level the index must reclaim to signal any potential reversal. Until then, the trend remains sideways to bearish.
Summary
This week’s market outlook hinges on critical events including the RBI’s rate decision, corporate earnings results, and developments in trade policy. Traders should remain cautious, especially as the market continues to hover near key technical support levels. Monitoring FII flows and broader economic signals will be essential in gauging the next market move.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a qualified advisor before making any investment decisions.
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