Key triggers for the market as Budget 2024 wrap-up: US Election, Federal Reserve meet and more

Stock market investors had a rough day in the last two trading sessions after Finance Minister Nirmala Sitharaman presented the full Union Budget for the financial year 2024-25.

The equity benchmark NIFTY dropped as much as 1.8% during intra-day trade on Tuesday, while the SENSEX was down 1.6% after Sitharaman announced a hike in taxes on long-term and short-term capital gains.

Benchmark indices also traded with volatility on Wednesday. However, they recovered from early losses to close 0.2% lower on July 24.

With the Union Budget done, investors will now look at the future triggers for the equity markets that can affect all the actions on D-street.

Q1 earnings reports

The earnings season has just begun. Bellwether companies like Infosys, Reliance Industries, HDFC Bank, and Wipro, among others, have already declared their Q1FY25 numbers.

Markets are now watching corporate earnings, which will be announced in the coming weeks, to decide the future course of action. Some of the big names across sectors are scheduled to announce their June quarter results this week, which may further set the market direction.

Adani Green Energy, Nestle India, DLF Limited, Tech Mahindra, Ashok Leyland, and Mphasis will announce their Q1FY25 results on Thursday, July 25. The June quarter results of Power Grid Corporation, Cipla, and Shriram Finance will follow on July 26.

Private sector lender ICICI Bank is scheduled to announce Q1FY25 results on July 27. Similarly, REC, IDFC First Bank, and Dr Reddy’s Laboratories are also scheduled to release Q1 results on Saturday.

Fed meeting on July 30-31

Economic policy would also be in focus as the United States Federal Reserve reviews interest rates on July 31. The Fed had last left the benchmark rates steady at 5.25%-5.5% for a seventh consecutive meeting in June 2024.

Markets are expecting only one rate cut this year from the US central bank, with four reductions in 2025, as inflation levels remain uncomfortable.

However, economists predict the Federal Reserve will cut interest rates twice this year, in September and December, according to a Reuters poll. Any US Fed rate cut announcement is likely to affect broader market trends across emerging markets.

RBI policy meet on 8 August

The Reserve Bank of India’s monetary policy committee (MPC) will meet in the first week of August to discuss interest rates. The RBI will announce its decision on the benchmark repo rate on August 8. As widely expected, RBI kept its benchmark policy repo at 6.5% for the eighth consecutive meeting in June 2024 amid persistent price pressures.

RBI governor Shaktikanta Das had, in fact, highlighted during the last meeting that the MPC, going ahead, may not ease its monetary policy based on rate actions by the US Federal Reserve, and the decision will be primarily determined by domestic economic conditions.

US Election trends

President Joe Biden has dropped out of the upcoming US presidential election, scheduled for November this year, and he has endorsed Vice President Kamala Harris as the Democratic Party’s new nominee. In the run-up to the US presidential poll, global markets will keep a watch on the political developments in the country.

The US elections results could affect the global markets. Former President Donald Trump is now in a leading position, according to reports, and any regime change in the US could have a global impact.

Apart from the above factors, foreign inflows and the monsoon trajectory remain important factors that may set the tone for the Indian stock markets.