US Fed interest rate decision, corporate earnings to drive markets this week: Analysts

The interest rate decision from the US Federal Reserve and the ongoing quarterly earnings from corporations will drive stock markets this week, where the Sensex and Nifty may face volatility amid the scheduled monthly derivatives expiry, said analysts.

Global market trends and the trading activity of foreign investors would also influence the equity markets.

Santosh Meena, Head of Research, Swastika Investmart, said, "On July 26, the US Federal Reserve will announce its policy decision, and there is an expectation of a 25 basis point rate hike. Market participants will closely analyse the comments made during the announcement. Additionally, on July 28, the Bank of Japan will also reveal its policy decision."

Meena added that Tata Steel, Asian Paints, Axis Bank, Bajaj Finance, BPCL, and Tech Mahindra will release their earnings in the upcoming week.

Shares in focus 

Shares of the country's most valuable company, Reliance Industries, will be in focus on Monday after it reported an 11 per cent decline in its first quarter net profit amid weakness in its mainstay oil-to-chemical business and higher finance and depreciation costs.

"The July F&O expiry on Thursday is likely to introduce some volatility into the market. Furthermore, market participants will keep a close eye on the ongoing monsoon session of Parliament. Institutional flows will be closely watched, as Foreign Institutional Investors (FIIs) have been significantly investing in Indian equity markets for the past three months," Meena said.

The movement of the Rupee and global oil benchmark Brent crude will also be in focus this week.

Vinod Nair, Head of Research, Geojit Financial Services, said "Investors will closely focus on the FOMC (Federal Open Market Committee)  meeting. While a 25-basis point rate hike is widely expected, investors will be more interested in the committee's commentary on future rate actions, seeking clues for the anticipated future rate pause."

"Markets will take further cues from ongoing Q1 FY24 results, global market trends, crude oil prices and FII/DII (Domestic Institutional Investors) activities," he added. 

"The ongoing quarterly earnings season will be in focus, as many major companies will be announcing their quarterly numbers this week, such as Canara Bank, Tata Steel, Asian Paints, Bajaj Auto, L&T, Tata Motors, Axis Bank, BPCL, Tech Mahindra, and Nestle," said Arvinder Singh Nanda, Senior Vice President, Master Capital Services.

Equity markets at record highs 

The BSE Sensex rose 623.36 points, or 0.94 per cent, last week and hit a record high of 67,619.17 on July 20.

"We expect higher volatility this week due to the scheduled monthly expiration of July derivatives contracts. However, the prevailing buoyancy on the global front, especially in the US markets, would help in keeping the tone positive," said Ajit Mishra, SVP, Technical Research, Religare Broking.

A steady up move in the US markets combined with continued buying across sectors kept the tone positive for most of the last week, Mishra said, adding that a sharp cut in the IT majors trimmed the gains in the final session. 

(With PTI inputs)