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The Indian stock market, represented by Dalal Street, is bracing for another week of potential volatility and consolidation, as bearish sentiment continues to dominate. The week ending July 25th marked the fourth consecutive week of losses, driven primarily by disappointing June quarter earnings, a cautious global outlook characterized by trade tensions, and a significant outflow of funds from Foreign Institutional Investors (FIIs). Looking ahead to the week starting July 28th, experts anticipate a continuation of this consolidation phase, with market participants closely monitoring a confluence of factors, including quarterly earnings reports from numerous companies, the Federal Open Market Committee (FOMC) meeting in the United States, updates on ongoing US trade negotiations (particularly with the August 1st deadline looming large), auto sales figures, and a range of crucial economic data releases from the United States. The monthly expiration of Futures & Options (F&O) contracts next week further adds to the potential for increased volatility. Specifically, the BSE Sensex recorded a decline of 0.4 percent during the past week, settling at 81,463, while the Nifty 50 index experienced a similar drop of 0.5 percent, closing at 24,837. The broader market, as represented by the Nifty Midcap 100 and Smallcap 100 indices, fared even worse, plummeting by 1.85 percent and 3.5 percent, respectively, indicating a more pronounced sell-off in smaller and mid-sized companies. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, suggests that the market is likely to remain in a consolidation mode, primarily due to the persistent uncertainty surrounding the ongoing India-US trade negotiations, a mixed earnings season for the first quarter of fiscal year 2026 (Q1FY26), and the escalating FII outflows. These factors collectively create a challenging environment for sustained market upside. Vinod Nair, Head of Research at Geojit Investments, echoes these concerns, stating that the subpar aggregate earnings performance across the board may pose a significant challenge to the sustainability of the current premium valuations observed in benchmark indices. In essence, the market's high valuation may not be justified if companies are not delivering strong earnings growth. Going forward, Nair emphasizes that the market's attention will be squarely focused on key economic data releases from the United States, including the Gross Domestic Product (GDP) figures and jobs data for the upcoming week. These data points will be crucial in shaping the Federal Reserve's (Fed) interest rate decision. The Fed's policy stance will, in turn, have a significant impact on global financial markets, including the Indian stock market.
One of the most important factors to watch in the upcoming week is the continuation of the June quarter earnings season. Over 500 companies are scheduled to release their Q1FY26 earnings reports, including several Nifty 50 heavyweights such as Larsen & Toubro, NTPC, Asian Paints, IndusInd Bank, Tata Steel, Power Grid Corporation of India, Hindustan Unilever, Maruti Suzuki India, Mahindra & Mahindra, Coal India, Eicher Motors, Sun Pharmaceutical Industries, ITC, and Bharat Electronics. Beyond the Nifty 50 constituents, a diverse range of companies from various sectors will also be reporting their earnings. These include Punjab National Bank, Hyundai Motor India, InterGlobe Aviation, Indus Towers, GAIL (India), TVS Motor Company, Swiggy, PB Fintech, One Mobikwik Systems, Ambuja Cements, Adani Power, Tata Power Company, LIC Housing Finance, UPL, KEC International, Mazagon Dock Shipbuilders, NTPC Green Energy, Torrent Pharmaceuticals, Waaree Energies, Amber Enterprises India, Bank of India, Varun Beverages, Welspun Corp, Aster DM Healthcare, Indraprastha Gas, Dabur India, Emami, Dr Lal PathLabs, Mankind Pharma, Delhivery, Godrej Properties, Multi Commodity Exchange of India, ABB India, and Federal Bank. The sheer volume of earnings releases underscores the importance of this period for assessing the overall health and performance of the Indian corporate sector. Experts generally believe that the earnings season has so far been largely in line with expectations. However, the market will be scrutinizing these upcoming earnings reports for any significant deviations or surprises that could trigger market movements. On the global front, all eyes will be on updates regarding tariff trade deals, particularly as the August 1st deadline approaches. This deadline represents a critical juncture for countries negotiating trade agreements with the United States. US President Donald Trump has repeatedly threatened to impose substantial tariff rates on trade partners who fail to reach agreements by this date. The European Union (EU) is a key focus area, with the US considering imposing a 30 percent levy on EU imports if a trade truce is not reached. Trump has indicated a 50-50 chance of reaching a deal with the EU, but negotiators on both sides remain optimistic about reaching an agreement before the deadline. Canada is also facing potential tariff threats, with Trump threatening to impose a 35 percent import duty on goods not covered by the US-Canada-Mexico Agreement if no deal is reached.
Further developments include a new round of trade talks between the US and China in Stockholm. There are indications that both sides may be considering extending the August 12th deadline for their trade truce. Regarding India, hopes for a mini trade deal with the US appear to have diminished, with US officials scheduled to visit India in the second half of August. The pause on the 16 percent tariffs slated to be imposed on India will expire on August 1st, making Trump's decision regarding countries unable to reach a deal by the deadline a crucial factor to watch. Despite these challenges, Union Commerce and Industry Minister Piyush Goyal has expressed optimism regarding Free Trade Agreements (FTAs) with the European Union, the USA, Peru, and Chile. Recently, the US has signed trade deals with the United Kingdom, Japan, the Philippines, and Indonesia. The US Federal Reserve's interest rate decision, scheduled for July 30th, is another key event to watch. Most economists expect the Fed to hold rates steady at 4.25-4.50 percent for the fifth consecutive meeting, as officials assess the impact of tariffs on the economy. The markets will also be looking for signals about a potential rate cut at the September policy meeting. In addition to the FOMC meeting, the United States will release a significant amount of economic data next week, including advance estimates for Q2 GDP, PCE prices, real consumer spending, monthly unemployment rate, non-farm payrolls, JOLTs job openings, personal income & spending, and pending home sales data. Most economists anticipate an increase in the unemployment rate for July, compared to 4.1 percent in June. The market will also be paying attention to Q2 GDP growth flash data from Europe, the Bank of Japan's interest rate decision, and Manufacturing PMI numbers from various countries. Domestically, market participants will monitor monthly auto sales volume data for July. Automobile companies such as Tata Motors, Maruti Suzuki, TVS Motor, Eicher Motors, Hero MotoCorp, Bajaj Auto, Escorts, Ashok Leyland, and Hyundai Motor India will be in focus. June's auto sales performance was mixed. Furthermore, industrial production and fiscal deficit numbers for June will be released, along with HSBC Manufacturing PMI data for July. The market will also focus on bank loan and deposit growth and foreign exchange reserves data.
The activity of Foreign Institutional Investors (FIIs) will be closely monitored, as they remained net sellers last week, selling Rs 13,553 crore worth of shares. This brings the total net outflow for the month to Rs 30,509 crore. Domestic Institutional Investors (DIIs) have been offsetting the FII outflow by net buying Rs 17,932 crore worth of shares during the week. The US dollar index is expected to be volatile, while the Indian rupee has depreciated. The week ahead is busy for the primary market with 14 public issues and 12 companies scheduled for market debut. Technically, the Nifty 50 is expected to consolidate further with a negative bias. Immediate support is expected at 24,700, followed by 24,550. On the higher side, 25,000 will be a key level to watch, followed by 25,250. Given the F&O expiry week, volatility is expected. The Nifty may trade in the 24,700–25,200 range in the immediate term. The volatility index has declined, hinting at the possibility of a major move in either direction. Key corporate earnings are also scheduled for next week. Overall, the upcoming week on Dalal Street presents a complex interplay of domestic and global factors, requiring careful monitoring and strategic decision-making for investors.