RIL, Tech Mahindra earnings, options expiry and geopolitical events – top things that will move Sensex and Nifty 50 this week

• The Nifty 50 and Sensex surged by 2.7% and 3% respectively, closing another week in the black.
• Earnings of companies like RIL, Tech Mahindra, HDFC and others are all set to be announced this week, and analysts expect this to have an impact on market movement this week.
• Options expiry and geopolitical events could lead to consolidation and increase in market volatility.
• Check out the latest news and updates on Business Insider.

The near 3% rally in the Nifty and Sensex could be tested this week as the factors that move the market will largely be global. Within India, the expiry of July futures and options, earnings from Reliance Industries, Tech Mahindra and the country’s largest mortgage lender HDFC will be in focus.

"Record virus infections in India have also unsettled investors, with its related delay in business and earnings recovery. Global markets were also affected on account of rising US-China tensions. Any further developments in this front will impact trade this week," said Vinod Nair, Head of Research, Geojit Financial Services.


One eye on the Fed and US GDP estimate

One thing that is given is that this will be the worst quarter of economic growth in the US as measured by the country's gross domestic product (GDP). How bad it will be is still unknown. "With 32 million Americans on unemployment benefits currently receiving a $600/week boost that is scheduled to end on Saturday, there could be tougher times ahead," an ING report dated July 24 said.

Goldman Sachs projected a 4.6% contraction in US GDP this, three weeks ago. Now, on July 30, the official data for the last three months will be out and it will show how bad the dent was due to the lockdown.

Investors may get a sense of the economic health a day before when the Fed declares the outcome of its policy review. A series of rate cuts, cash injection, and bond purchases have helped markets but traders will want to know how much more is Chairman Jerome Powell willing to support the market as the economy remains fragile.

The best outcome, according to ING, will be a signal that the Fed will allow US inflation to shoot over the 2% target.

RIL, Tech Mahindra, HDFC to announce June quarter earnings

Some of the biggest players amongst India Inc are all set to announce their June quarter earnings this week. This includes the likes of RIL, Tech Mahindra, HDFC and Kotak Mahindra Bank.

"Investors will keep a close eye on the upcoming earnings commentary, US-China escalation, impact of coronavirus on the economy and development on vaccine," said Sumeet Bagadia, Executive Director, Choice Broking.

Geopolitical events could bring back volatility in the market

All eyes will be on the US-China tensions that have increased last week. After the US ordered China to close its Houston consulate, China followed it up by ordering the closure of the US consulate in Chengdu.

“After the recent spike in Nifty, market is expected to consolidate for a couple of days, given flaring US-China relations and persistent rise in virus cases,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal, according to a PTI report.

Options expiry could add to consolidation

Options are all set to expire on July 30, and this could add to the consolidation expectations this week.

Markets tend to be volatile closer to the expiry of options every month, as investors rush to square off their positions based on their expectations. While this doesn’t necessarily mean markets will fall or rise, volatility tends to increase during these times.

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