Factors that will drive markets this week

Analysts say the Reserve Bank of India’s (RBI) interest rate decision, macroeconomic data and global trends will drive market movements this week.

In addition, trading activity by foreign investors and the latest batch of Q1 earnings announcements will also set trends on the stock markets.

The HSBC PMI (Purchasing Managers’ Index) for the services sector is due to be published on Monday.

“This week, all attention will be on global markets as we see the first serious signs of weakness after a long period of stability.

“This will be a test of the strength of the Indian market, which has remained resilient on the back of ample domestic liquidity and improved macroeconomic outlook despite global headwinds and valuation concerns,” said Santosh Meena, head of research at Swastika Investmart Ltd.

Meena added that on the domestic front, the RBI’s monetary policy announcement on August 8 will be important.

“The last batch of Q1 results will determine changes in share prices.

“In addition, institutional flows will play a key role in market dynamics,” he added.

Bharti Airtel, BEML, ONGC, NHPC, Life Insurance Corporation of India and MRF will announce their financial results this week.

“Looking ahead, the chances of further consolidation appear high given higher valuations, weak Q1 results and ongoing global market consolidation.

“The RBI meeting this week may give some clues on the outlook for interest rates, while the status quo is expected for now,” said Vinod Nair, head of research at Geojit Financial Services.

Amid widespread selling pressure, the 30-share BSE Sensex fell 885.60 points or 1.08 per cent to end at 80,981.95 on Friday.

The broader NSE Nifty index fell 293.20 points or 1.17 per cent to end at 24,717.70.

Price movements in the global oil benchmark, Brent crude, and the rupee-dollar exchange rate trend will also determine market trends.