Big Shift Ahead: Market Eyes FOMC Minutes, Monsoon Progress as Equities Surge After Global Uncertainty Eases

Big Shift Ahead: Market Eyes FOMC Minutes, Monsoon Progress as Equities Surge After Global Uncertainty Eases​

The Indian equity markets posted a strong gain during the week ending July 3, extending their uptrend for a fourth consecutive week. This resilience was primarily driven by easing concerns regarding the stability of the US-Iran peace arrangement and reduced expectations of a Fed funds rate hike following softer US labor market data. Investors also received a boost from positive momentum in domestic sentiment and the promising outlook of the India-Japan summit, which suggests potential progress on trade, AI collaboration, and a rupee-yen settlement framework.

The Nifty 50 gained 215 points (0.89 percent) to close at 24,271. Meanwhile, the BSE Sensex climbed 663 points (0.86 percent) reaching 77,764. Momentum was equally visible in smaller caps, with Nifty Midcap 100 and Smallcap 100 indices rising by 0.64 percent and 2.05 percent, respectively.

Corporate Earnings Season: TCS Leads Q1FY27 Marathon​

The market is poised for a significant corporate earnings season starting next week (Q1FY27). Tata Consultancy Services (TCS) will be the first marquee company to announce its quarterly results on July 9. The list of companies expected to report includes LTM, L&T Finance, Avenue Supermarts, Anand Rathi Wealth, and GM Breweries.

Experts noted that management commentaries regarding the full-year outlook will be a critical factor throughout the season. This commentary, coupled with easing Middle East tensions and falling oil prices, is anticipated to shape investor sentiment.

Global Focus: What Markets Will Watch from FOMC Minutes to Oil Prices​

Globally, attention is sharply focused on the FOMC minutes scheduled for July 8. Given that recent soft jobs data has reduced the probability of a Fed funds rate hike, markets are keen to assess any perceived internal divisions among Federal Reserve officials regarding their future policy path.

Meanwhile, oil prices will continue to be keenly observed. After four months of volatile swings, WTI and Brent stabilized near $69 per barrel and $72 per barrel, respectively. This stability comes as a steady recovery in tanker traffic through the Strait of Hormuz continues.

FII Flows Intensify Amid Domestic Investor Support​

Foreign Institutional Investors (FIIs) were net sellers to the tune of over ₹4,000 crore in the last week and more than ₹49,000 crore in June. However, this outflow was completely compensated by strong domestic support. Domestic Institutional Investors (DIIs) net bought shares worth ₹12,600 crore during the week alone, and surpassed the ₹85,000 crore mark for buying in June.

V K Vijayakumar of Geojit Investments suggested that FPI outflows are likely to decline. The sharp 37 percent fall in crude prices from its May high, combined with expected large inflows from FCNR (B) deposits, is set to help stabilize the rupee and prevent massive FII selling.

Economic & Commodity Risks: Monsoon and Oil Price Dynamics​

The market remains vigilant regarding several key risks, including potential inflation driven by monsoon concerns and continued geopolitical uncertainty. The Southwest monsoon rainfall recorded for June was 40 percent below the Long Period Average (LPA). Despite favorable forecasts for July from the IMD, which anticipates at 94 percent of LPA, the IMD has revised its 2026 monsoon forecast to 90 percent due to El Niño conditions.

Crude oil futures closed the week down 0.26 percent at $71.80 a barrel. This decline offered significant relief to oil-importing nations like India. However, Kaynat Chainwala of Kotak Securities warned that Iran signaling charging transit service fees from mid-August could potentially lift shipping costs, a factor that the market has not yet fully priced in.

IPO Action and Technical Outlook​

The primary market action for the coming week is expected to be more moderated after a busy prior week. Only four IPOs are scheduled to open compared to ten public issues in the previous period. Kusumgar will commence its ₹650-crore IPO on July 8, while Laser Power & Infra's ₹742-crore offer is set for July 9.

Technically, the Nifty 50 has maintained gradual strength despite consolidation, trading well above key resistance trendlines. Experts suggest that 24,200 to 24,000 remains a crucial support zone. The India VIX dropped 9.6 percent for the week to 11.79, signaling rising comfort for bulls.

Key Factors Set to Guide Market Sentiment Next Week​

The market narrative will be shaped by several domestic and international factors:

• Corporate Earnings: The commentary on the full-year outlook from management in Q1FY27 is paramount amidst easing Middle East tensions and stable oil prices.
• FOMC Minutes: These minutes will serve as a key inflection point, with markets analyzing the degree of consensus among Fed officials regarding the policy path following recent soft jobs data.
• Global Economic Data: Key releases include monthly retail sales and PPI from Europe, along with inflation, PPI, and vehicle sales data from China.
• FII/DII Flows: The trend of foreign investor sentiment will be closely watched, especially given the significant swing in crude prices that could persuade FPIs to turn into buyers in India.