Kolkata: Last week was quite disastrous for the stock market with the decline wiping away as much as Rs 2.74 lakh crore of investor wealth. The erosion was particularly mammoth when one bears in mind that it was suffered by nine of the top 10 stocks in the country. HDFC Bank suffered an erosion of Rs 1.18 lakh crore, the biggest in the market. In this situation, this week could be determined by crude oil prices arising out of the West Asia situation and the US Fed rate decision, analysts have said. Last week, rising crude oil price, West Asia conflict and weaker rupee against the USD drgeed the Sensex 30 down 2,091 points, or 2.67%. Nifty 50 went down 567 points, or 2.32%.
The stocks to suffer the maximum impact of the intensifying conflict between the US and Iran and the expansion of the circle of conflict that saw Houthis attacking Saudi vessels were some of the biggest names in the Indian market. These included Reliance, SBI, ICICI Bank, TCS, Bajaj Finance, LIC, Bharti Airtel and L&T. But the biggest shock was delivered to HDFC Bank which is the largest private bank in India. This bank’s market cap dropped by as much as Rs 1.18 lakh crore and reach Rs 11.44 lakh crore. HDFC Bank shares dropped by about 9.4% as an outcome of the its Q11FY27 results, when it faced margin pressure. The other stocks to suffer erosion were RIL (Rs 65,429 crore), SBI (Rs 26,815 crore), and Bajaj Finance (Rs 26,803 crore).
We are in the midst of the Q1FY27 results season. A number of major companies will announce their results this week. The list includes Coal India, BEL, L&T, HUL, Adani Enterprises, Asian Paints, Adani Ports, Bajaj Finance, M&M, Tata Steel, Maruti Suzuki, ITC and Sun Pharma. Their results will certainly have a bearing on the market sentiment.
But as it has been happening since March, the state of the conflict in the West Asian theatre and the crude oil prices would continue to influence the trajectory of the markets. If the situation cools, it could ease crude prices and trigger renewed buying enthusiasm. “Developments surrounding the US-Iran conflict, shipping activity through the Strait of Hormuz, and movements in crude oil prices will remain key drivers of global risk sentiment. In addition, investors will closely monitor the US Federal Reserve’s policy meeting, where interest rate guidance and commentary on inflation will be critical for global markets,” Ajit Mishra – senior vice-president, research, Religare Broking, was quoted as saying.
The US Federal Reserve is supposed to hold its rate-setting FOMC meeting on July 28-29 at the end of which the interest rate decision will be announced. This could be the most important macro-economic event of the week. Analysts are hoping that the FOMC will not tinker the rates. However, the Fed’s assessment of the inflation outlook and economic growth will be keenly tracked.
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Avijit Ghosal has been writing on topics of business, industry and investment for the past three decades. He also writes on the broad economy, infrastructure and issues in banking. He has worked for economic dailies such as the Business Standard, The Economic Times, business magazines such as Business Today, English broadsheet the Hindustan Times and Bengali daily Anandabazar Patrika before joining TV9 Network.