Sector-specific moves are expected to occur next week amid budget-related discussion. Here are the ten most important variables to observe.

Despite contradictory signals from the global market, notably about inflation, Indian benchmark indexes rose this week. Markets ended a two-week consolidation phase by rising more than 2% this week, extending the current upswing. Experts predict the market to move sideways next week owing to a lack of major buying or selling cues.

The monsoon's development will be keenly studied for its near-term influence on investor confidence. The impending GST conference may result in rate modifications in specific industries, which might influence market direction. Investors will also monitor FII and DII fund flows, as well as crude oil prices, to evaluate general sentiment.

On the global front, an increase in US unemployment claims and disappointing housing statistics have heightened the prospect of a rate decrease in September. The focus for the next week will be on the release of US and Indian manufacturing PMI data, as well as the FED Chair's address. "The publication of economic data points next week would maintain some market volatility. The car industry is set to be in the spotlight when OEMs report their monthly vehicle sales figures," said Siddhartha Khemka, Senior Group VP, Head of Research at Motilal Oswal.

Sector-specific moves are expected amid budget-related hype. While the underlying attitude remains strong, declines may draw opportunistic purchasing, potentially supporting the market, according to experts. However, big rises may be stopped by profit-taking.

"The consolidation phase in broader indices is expected to conclude soon, although participation may be limited to quality names. Traders are advised to continue with a "buy on dips" strategy, focusing on careful stock selection," said Ajit Mishra – SVP, Research, Religare Broking Ltd.

Here are 10 key factors to watch:

Auto Sales

Market players will be watching the monthly vehicle sales figures for June, which will be revealed on July 1. Automobile wholesale volumes across sectors are predicted to be mixed, with rise in two-wheelers and passenger vehicles (PV).

The commercial vehicles (CV) market is expected to have flat sales growth, while tractor sales are expected to dip this month. According to Nuvama Institutional Equities, two-wheeler and tractor volumes will expand in high single digits vs low single digits for PV between FY24 and FY26.

Domestic Economic Data

HSBC Manufacturing PMI Final for June, on July 1

HSBC Services & Composite PMI Final for June, on July 3

Foreign exchange reserves for the week ended Jun 28, on July 5

FOMC Minutes, US Jobs Data and Fed Chair Speech

FOMC Minutes on July 3

Federal Reserve Chairman Jerome Powell's upcoming speech on Tuesday, July 2, 2024, is anticipated to influence markets.

Global Economic Data

Aside from the FOMC Minutes and Powell's speech, the attention will be on S&P Global Manufacturing PMI, non-farm payrolls, unemployment rate, JOLTs job openings and departures, initial jobless claims, and monthly factory orders data from the United States next week.

Manufacturing PMI data from various developed and developing countries, ECB non-monetary policy meetings, Euro inflation and unemployment rates, Japan's Jibun Bank manufacturing PMI, and consumer confidence will all be monitored.

FII Flow

Foreign institutional investors (FII) activity will also be monitored next week, but FII outflows have been more than offset by consistent, robust buying by domestic institutional investors (DIIs) in the equity markets over the previous week, with FIIs net selling Rs 14,704 crore worth of shares in the cash segment and DIIs net buying stocks worth Rs 20,796 crore, according to provisional data.

FIIs acquired Indian equities worth around Rs 26,565 crore in June, ahead of the Union Budget and India's entry in JP Morgan's bond index, fueled by anticipation of continuing reforms following the elections. Analysts believe that the fresh interest stems from higher GDP growth estimates and solid profitability from Indian corporations.

“FII buying can sustain provided there is no sharp up move in U.S. bond yields,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services. In the year so far, FIIs have net bought shares worth Rs 129,046 crore, while DIIs have bought shares worth Rs 236,325 crore at the same time

IPO

The main market is set for another extraordinary week as three businesses prepare to conduct initial public offerings (IPOs) for more than Rs 2,700 crore. Emcure Pharmaceuticals, whose Executive Director is Namita Thapar of Shark Tank fame, and Bansal Wire will both go public next week.

Furthermore, Ambey Laboratories will have a SME issue. Aside from these three public offerings, the market will witness up to 11 listings, including Allied Blenders and Vraj Iron and Steel, both of which attracted substantial investor interest in their previous IPOs.

Technical View

After showing consistent up moves in the last four sessions, Nifty slipped into minor profit booking from the new highs on Friday. A small negative candle was formed on the daily chart with a small upper shadow.

"Technically, this formation is indicating a minor negative set-up for the market at the highs. Further weakness below 23800 levels could confirm a short-term top reversal pattern. However, a sustainable move above 24200 levels is likely to negate this bearish formation," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

"The near-term uptrend status of Nifty remains intact. Having moved up sharply Nifty is currently facing a hurdle at the resistance of 24,000-24,100 levels. Any dip from here is likely to be a buying opportunity. Immediate support is at 23,800 levels," he added.

As for Bank Nifty, for the selling pressure to continue, there needs to be follow-up selling; otherwise, the index may get stuck in a consolidation range, according to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

"The immediate support is at 52,000, where the highest open interest is built up on the put side, while the immediate resistance lies in the 52,700-53,000 zone," he said.

F&O Cues

The weekly options data shows that the 25,000 strike holds the maximum open interest. This level can act as a key resistance level for the Nifty in the short term. The 24,500 strike and the 24,000 strike followed it.

Maximum Call writing was observed at the 25,000 strikes, followed by the 24,500 and 24,900 strikes. The maximum Call unwinding was seen at the 23,800 strikes, followed by the 23,700 and 23,900 strikes.

On the Put side, the maximum open interest was observed at the 23,000 strike, which can act as a key support level for the Nifty. It was followed by the 24,000 strike and the 23,500 strike.

The maximum Put writing was visible at the 23,500 strike, followed by the 23,000 and 24,100 strikes. Put unwinding was observed at the 22,700 strike, followed by the 22,300 and 22,600 strikes.

India VIX

The volatility sustained below the 15-mark as well as the 200-day EMA (Exponential Moving Average), keeping the bulls comfortable. The India VIX, the fear index, fell 2.47 percent to 13.8 levels on Friday, but for the week, it gained 4.72 percent.