Monetary policy meeting of the Reserve Bank (July 29), price movement of crude oil and results of index heavyweights could provide vital cues for the direction to the markets this week.
Even as the central bank grapples to control inflation, which is hovering around the 13-year high (currently 11.89 per cent), economists expect it to maintain its hawkish stance. There will be little respite from volatility as the expiry of July derivatives contract closes in.
Although crude has retraced from record highs of $146 to $123 at present, any sharp rebound in oil prices would dampen sentiment. Market heavyweights like Larsen & Toubro, Unitech, HDFC Bank and NTPC will be declaring their Q1 results this week.
What to expect this week
About half of the 1,300 point gain till Wednesday was erased by Friday on concerns that the RBI may raise key short-term rates in the upcoming monetary policy to curb rising inflation.
Sentiment was also hit by seven blasts that took place in Bangalore. While the 30-scrip benchmark index gained 639 points or 4.69 per cent in the week to 14,274, the Nifty edged up 219.6 points or 5.36 per cent to 4,312.
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While foreign institutional investors (FIIs) have bought shares to the tune of Rs 43 crore in July, mutual funds have shown much more confidence, increasing their exposure by Rs 882.20 crore during the month.
Stock to watch
The SBI scrip could see some action at the start of the week after the bank reported better-than-expected Q1 numbers on Saturday, July 25 despite rough market conditions and higher provisioning. The stock has gained 11 per cent last week. The bank clocked a 15.08 per cent jump in its standalone net profits for the quarter ended June 30 at Rs 1,640.79 crore, as against Rs 1,425.81 crore a year ago, helped by strong interest income. | ||||||||||||||||
Analysts polled by Bloomberg had estimated earnings of Rs 1,596.15 crore. Interest earned for the quarter rose 21.19 per cent to Rs 13,799.2 crore, while total income for the quarter rose 32.50 per cent to Rs 16,203.1 crore.
The bank made a total mark-to-market provisioning of Rs 1,656.61 crore on its investment portfolio during the quarter as against a write back of Rs 377 crore in the corresponding quarter in the previous year.