Fed review, corporate results and economic data to dictate Sensex movement

The US Federal Reserve policy review on July 29-30 will dictate the future course of the market for the rest of the week.

All attention will be on the statement the Fed makes and its future course of action. At the last such meeting, on June 18, the Fed acted as expected by cutting its monthly bond purchases by $10 billion, lowering it to $35 billion.

The Reserve Bank of India, whose next monetary policy review is expected on August 5, will closely watch the guidance given by the Fed.

The market doesn't expect any change in US interest rates which are currently at 0.25 per cent. In fact, weak global growth could go on for longer and hopes are that the increase in the US rate may be postponed beyond the middle of 2015. This feeling has in turn seen a rise across emerging markets from June 2014. The emerging market index has gained close to three per cent.

Last week, the BSE Sensex touched a new-all time high of 26,300.17 on Friday, July 25. Despite some profit booking at higher levels it closed above the 26,000 mark. The market may remain volatile ahead of the futures & options (F&O) segment. The July 2014 F&O contract expires on Thursday, July 31.

Key corporate results from index heavyweights such as Hindustan Unilever (HUL), Larsen & Toubro, ICICI Bank, Tech Mahindra, Maruti Suzuki, Ranbaxy Labs, Bharti Airtel and Sesa Sterlite will be worth watching. HUL will announce its quarterly results on Monday, July 28, while Bharti Airtel, Ranbaxy Labs and Sesa Sterlite are to declare theirs on Tuesday. HCL Technologies, ICICI Bank, Maruti Suzuki, NTPC and Tech Mahindra will declare results on Thursday, while JSW Steel and Union Bank of India will do so on August 1.

The July 2014 automobile sale and cement sale numbers towards the latter part of the week and the June HSBC Manufacturing PMI to be released on August 1, will also be in focus. The market will be closed on Tuesday, July 29, on account of Ramzan Eid.

What could hit the Sensex adversely is rising inflation and uncontrolled fiscal and current account deficits. Despite the rise in prices, the mood is still optimistic. Factors which seemed to be critical for the markets a couple of months back do not seem to be bothering it today.

Meanwhile India is the only big emerging economy to have escaped a cut in the IMF's update of its world economic outlook. The IMF has retained its forecast of 5.4 per cent growth in Indian economy in 2015 and a stronger 6.4 per cent growth the following year. It is the right time to build a long term portfolio and use any correction that takes place as an opportunity to buy stocks. The market is not a runaway market any longer.