Markets week ahead: Covid-19 cases, RBI meet in focus

India’s benchmark indices snapped their six-week winning streak as Covid-19 cases continue skyrocketing amid growing concerns about economic activity. India is now in top 4 for infections.
Quarterly earnings will continue to guide investors in the week ahead, as a number of big companies are scheduled to declare their numbers. Investors will also be keeping an eye on FII flow, which supported last week’s rally. Any further deterioration in US-China relations may also have an impact on financial markets globally.
Auto and cement companies will release their monthly sales data for July. Investors will keep track of these numbers as they will indicate any signs of uptick in demand for discretionary products and if people are undertaking new construction projects.

Meanwhile, among commodities crude oil is expected to witness volatility ahead EIA inventory data release. Record run in gold and silver prices is likely to continue on safe-haven demand and as the geopolitical risks are in place.
On currency front, the INR remains under pressure as stress on the government budget and banking sector continue. A weaker US Dollar appears merely a stay of execution. Very real possibility that India will repeat Indonesia’s recent playbook, and get the central bank to directly purchase new government bond issues. Negative currency and stocks.

Highest risk economy in Asia from an economic and Covid-19 perspective.
The Reserve Bank of India to cut 25 bps this week, will not lift the gloom.
Globally, US Jobless claims report on Thursday and President Donald Trump seeking to delay elections on account of Covid-19 pandemic will be the key factor to watch.

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