Indian stock market tumbled on Friday last week, posting the worst weekly fall in over last 18 months as the ongoing cross-border tensions between the United States and North Korea turned the sentiments negative. The overall behaviour of investors was mostly subdued after the Indian market regulator SEBI ordered to the bourses to restrict 331 companies listed on exchanges which are expected to be shell entities and weak earnings also fulled the pessimism amid the market participants.
The domestic equity markets will remain closed on Tuesday for Independence Day holiday.
Here are the major factors which may guide the markets this week:
United States and North Korea geopolitical tensions:
In a recent development, North Korea said on Saturday that nearly 3.5 million workers, party members and soldiers volunteered to join or rejoin its army to resist the new UN sanctions and to fight against the United States in the current geopolitical tension between Pyongyang and Washington. Earlier this week, nuclear-armed North Korea threatened to strike the United States and its Pacific territory of Guam. Considering the present scenario the top US intelligence official, Director Mike Pompeo of Central Intelligence Agency said on Sunday he would not be surprised if North Korea tested another missile, given that it had two tests in July, amid rising tensions between the two nations.
US President Donald Trump has offered fiery warnings for North Korea, saying that the U.S. military was “locked and loaded.” North Korean officials in turn have accused the US leader of driving the Korean peninsula to the brink of nuclear war. North Korea said on Thursday that plans would be completed by mid-August to fire four intermediate-range missiles to land near the U.S. Pacific island of Guam, 3,500 km (2,175 miles) away.
Guam, some 7,000 km from the US mainland, is a target because it is home to US Naval and Air Force bases, from which two B-1B supersonic bombers were deployed close to the Korean peninsula on Tuesday.
US premier Donald Trump wrote on Twitter on Friday that US “military solutions are now fully in place, locked and loaded, should North Korea act unwisely.” Trump has urged China to apply more pressure on North Korea. Donald Trump is expected on Monday to launch a trade investigation into China.
White House officials have insisted the investigation was not designed to apply additional pressure on China as it relates to North Korea despite the president’s previous remarks that he would be more amenable on trade if China stopped Pyongyang’s nuclear program.
After earnings affect:
Shares of Sun Pharma, Gujarat State Petronet, Sun TV Network, Gitanjali Gems, REC, Bank of Baroda, HDIL, SAIL, Corporation Bank, Suzlon Energy, CESC, BPCL, Dhanlaxmi Bank, Cox & Kings and Praj Industries will be in focus as these stocks will react to the first quarter earnings announced on Friday after market hours. Other stocks like DLF, Adani Ports, United Bank, Ansal Properties, Godfrey Phillip, Mercator, Parsvnath Developers, Vivimed Labs will also be in watch today witnessing the post results movement.
This week is queued up with the macro economic data with the release of key inflation figures for the month of July which includes WPI (wholesale price index) for inflation, food, fuel, manufacturing, inflation rate and balance of trade scheduled for today. Wholesale inflation for the month of June fell to 0.9% which is the lowest in at least eight months as prices in food articles, including vegetables, declined.
Another major lineup for this week is the announcement of foreign exchange reserves, deposit growth, and bank loan growth later on Friday. Last week the country’s foreign exchange reserves touched a new life-time high of USD 393.448 billion after rising by $581.1 million in the week to August 4 on account of increase in foreign currency assets (FCAs), the RBI data showed.
There are around 636 listed companies which scheduled to announce the first quarter earnings for the financial year 2017-2018. Out of which 600 companies are expected to release the earnings report card on Monday itself.
Indian markets last week:
BSE Sensex lost around 1,060 points in the last week. The biggest drag came from State Bank of India after the country’s largest lender posted weak earnings for the April-June quarter of FY 2018. The benchmark Sensex lost over 300 points to end at 31,213.59 points while the broader Nifty 50 fell 109 points to settle at 9,710.8 points.
Weakening global risk appetite has sparked a wide round of profit-taking. Both the benchmark indices ended nearly 3.5% down for the week, breaking the five-week winning streak. Indian equities marked their worst week on Friday since mid-February 2016 as the 30-share barometer closed 1.01% at 31,213.59 points, its lowest close in over a month and the wider Nifty ended 1.11 percent lower at 9,710.8 points.
Sentiment suffered another jolt after the Economic Survey said achieving the high end of the 6.75-7.5% growth projected previously will be difficult due to an appreciation of the rupee, farm loan waivers and transitional challenges from implementing GST.