Q1 earnings, US-India trade talks likely to drive markets this week

In an event-heavy week, stock investors will track quarterly earnings of several bluechip firms, the likely outcome of ongoing India-US trade talks, and inflation data for market cues, analysts said on Sunday.

Moreover, global market trends and trading activity of foreign investors would also guide movement in equities, they said.

"While global cues will continue to dictate trends in domestic equities, investors' focus will be on the likely outcome of India's ongoing trade negotiations with the US. Overall sentiments continue in a dilemma as the wait for a trade deal with the US continues. Traders are not confident about taking any major positive bets in this uncertain environment.

"In contrast, first-quarter corporate earnings will be keenly watched over the next few weeks...," SimranJeet Singh Bhatia, Senior Equity Research Analyst at financial services provider Almondz Global, said. 

Markets drifted lower during the last week and lost over a per cent, primarily pressured by the lingering uncertainty surrounding global tariffs and a disappointing start to the earnings season, an expert said.

Last week, the BSE benchmark Sensex dropped 932.42 points or 1.11 per cent, and the NSE Nifty tanked 311.15 points or 1.22 per cent.

"Looking ahead, the earnings season will be in full focus. A packed calendar includes results from HCL Tech, Tech Mahindra, Axis Bank, Wipro, JSW Steel, among others. On the macroeconomic front, participants will closely track the WPI and CPI inflation data scheduled for July 14 for further cues on the economy, Ajit Mishra, SVP, Research, Religare Broking Ltd, said. Apart from these, the trend in FII flows and movement in crude oil prices will also remain on traders' radar, Mishra said.

Globally, markets will watch for any updates related to trade negotiations and tariffs, along with key economic data releases such as US inflation and China's GDP numbers, he added.

While the tone remained largely stable in the first three sessions, profit-booking in the final sessions dragged the indices lower, Mishra said.

Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, "As the earnings season progresses, markets are expected to witness volatility driven by stock-specific factors.

"The lingering uncertainty around trade negotiations is likely to keep markets in a consolidation mode. Investors will now focus on key domestic macro data, including CPI and WPI inflation prints, while tracking ongoing Q1 earnings and updates on the India-US trade deal."  Sentiment weakened amid heightened global trade tensions following US President Donald Trump's renewed tariff threats on Canada and other key partners, Mishra added.