Market Ahead Podcast, August 2: Factors that could guide markets this week

In the action packed week, markets would be driven by the ongoing earnings season, RBI policy meet and macroeconomic data. Besides, global cues and pace of vaccination will also guide the local equities. 

The domestic benchmark indices had declined in the four of last five sessions and ended the week over 0.50 per cent lower amid global market rout.

The key event this week is the RBI policy meet outcome and Governor Shaktikanta Das' commentary. Expectation is that the RBI too, just like the Fed, will not hamper the repo rates so as to continue supporting impacted sectors with cheaper credit. Meanwhile, Governor's comments on inflation will throw some light on the our economy and any future actions the central bank might take.

Ahead of the poilcy outcome, macroeconomic data will shed some light on the health of the economy. The Manufacturing PMI is slated to be out on August 2 and Markit Services & Composite PMI numbers for July are scheduled on August 4.

Auto sales numbers along with the result season will continue to drive stock specific movements on D-Street. Prominent names like HDFC, Bharti Airtel, State Bank of India, Titan Company, Dabur, M&M, Cipla, GAIL India, Adani Ports, Hindalco Industries, Punjab National Bank, Bank of Baroda, HPCL, Tata Consumer Products and Divis Labs poised to post their quarterly earnings this week. 

The action in the primary market will also remain hot as four IPOs are slated to open on August 4, leaving investors spoilt for choice. 

These companies together look to raise a little over Rs 3,600 crore. At Rs 1,838 crore, KFC and Pizza Hut operator Devyani International is the largest IPO amongst them. Krsnaa Diagnostics is planning to raise Rs 1,213.33 crore while Windlas Biotech Rs 401.54 and Exxaro Tiles Rs 161 crore. 

The shares of Glenmark Life Sciences will debut on bourses on August 6. The IPO was subscribed over 44 times last week and the shares are currently trading at a premium of 18-21 per cent in the grey market. 

Lastly, FII flow, rupee's trajectory and oil price movement can also sway market sentiments. 

And now, let's take a look at the trade setup for today.

Asian stocks and US equity futures rose as some of the concerns over Covid-19 reopening disruption and China’s regulatory crackdown eased.  Japan’s Topix index rose 1.5 per cent, Australia’s S&P/ASX 200 Index rose 0.1 per cent and South Korea’s Kospi index gained 0.3 per cent. Meanwhile, S&P 500 contracts rose 0.4 per cent and Nasdaq futures added 0.3 per cent. 

Amid this backdrop, Indian equities looked poised for a firm start to the day. SGX Nifty traded 91 points higher at 15,865 around 7.35 am. 

In stock-specific moves, shares of Adani Enterprises will be in focus as the company has incorporated Adani Petrochemicals as a wholly-owned subsidiary to carry on business of setting up refineries, petrochemicals complexes and specialty chemicals units.

IDFC First Bank reported a net loss of Rs 630 crore in the April-June quarter due to provisioning measures for cushioning the impact of the second wave of the Covid-19 pandemic. The bank had posted a net profit of Rs 93.55 crore in the year-ago quarter ended in June 2020.

NTPC posted a nearly 17 per cent rise in consolidated net profit to Rs 3,443.72 crore for the April-June quarter on the back of higher revenues. The consolidated net profit of the company in the quarter ended on June 30, 2020, was Rs 2,948.94 crore.

Britannia Industries reported a 29 per cent decline in consolidated net profit at Rs 387 crore for the quarter ended June 30 compared with Rs 543 crore for the April-June period of previous fiscal.

Torrent Power has inked an agreement with Lightsource India Ltd and Lightsource Renewable Energy (India) Ltd for acquisition of a 50 MW solar plant. The enterprise value for the deal is around Rs 317 crore