Macro-economic data points, along with quarterly results and a decision on the Goods and Services Tax (GST) sub-rates on gold, will form the...
Macro-economic data points, along with quarterly results and a decision on the Goods and Services Tax (GST) sub-rates on gold, will form the major themes for the Indian stock markets during the upcoming week, market observers say.
Already at dizzying heights, potential triggers like news on monsoon progress, global geo-political situation and crude oil prices could unleash "massive volatility", analysts feared.
Last week, the key equities markets - BSE Sensex and NSE Nifty - touched new peaks of 31,000 and 9,600 points, respectively.
"Markets continue to remain buoyant on support from global markets and a dovish US Fed. New highs have been breached. The sentiment is expected to remain positive," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.
"Domestic fund managers have been deploying the cash inflows aggressively. Earnings have shown selective improvement more on bottom-up basis."
Analysts pointed out that key macro-economic data points like quarterly gross domestic product (GDP), monthly auto sales and eight core industries (ECI) figures will heavily influence the domestic equity markets.
"India's GDP and ECI figures shall keep the market expectant. Meanwhile, oil's volatility and US budget proposals should further guide global cues," Anand James, Chief Market Strategist, Geojit Financial Services, told IANS.
The Ministry of Commerce and Industry will release the Index of ECI figures for April 2017. This will be followed by the release on May 31 of India's quarterly estimates of GDP growth for the fourth quarter of 2016-17.
Subsequently, the monthly automobile sales figures, likely revision of petrol prices and the Purchasing Managers' Index (PMI) manufacturing data will be released on June 1.
Besides the macro-economic data points, upcoming quarterly results of major entities like Coal India, M&M, L&T, NTPC, Hindalco and Power Finance Corporation are expected to guide the movement of the markets.
"Prospects of NPAs (Non-Performing Assets) resolution measures are likely to keep banks buoyant," James explained.
"With strong roll-over figures and more stocks being added to the F&O (Future and Options) segment, markets should continue being lively. Lower chances of US Fed's FOMC (Federal Open Market Committee) rate hike decision in June and a normal and early monsoon will lend support to the ongoing uptrend."
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, important cues such as foreign institutional investors' (FIIs) funds inflow and near-term trends like the rupee's price movement against the US dollar will affect market sentiments.
Figures from the National Securities Depository Limited (NSDL) revealed that foreign portfolio investors (FPIs) invested in a total of equities and debt worth Rs 7,677.31 crore, or $1.18 billion, during May 22-26.
Provisional figures from the stock exchanges showed that FIIs sold stocks worth Rs 324.95 crore, while domestic institutional investors (DIIs) purchased scrips worth Rs 2,584.61 crore during the week.
"The rupee's movement against the US dollar will be a crucial factor for market sentiments next week," Desai said.
The Indian rupee had strengthened by 20 paise to 64.44-45 against the US dollar from last week's close of 64.64-65 to a greenback.
In addition, the GST Council is scheduled to meet again on June 3 in New Delhi to decide on the rates to be applied on gold, as well as beedi, among others.
On May 18, the GST Council had approved the tax rates for 1,211 items. The single tax regime on the supply of goods and services is proposed to be rolled out from July 1.
On technical-levels, NSE Nifty is expected to move upwards with a crucial support mark of 9,372 points.
"Technically, with the Nifty surging higher to new life highs, the index remains in an intermediate uptrend," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.
"Further upsides are likely once the immediate resistances of 9,605 points are taken out. Crucial supports to watch for a trend reversal is at 9,341 points."
Last week, the key equity indices touched new peaks on the back of robust corporate results, rupee appreciation and expectations of further economic reforms.
Consequently, the barometer 30-scrip BSE Sensex surged by 563.29 points or 1.85 per cent to 31,028.21 points, while the wider 51-scrip NSE Nifty rose by 167.2 points or 1.77 per cent to 9,595.10 points.
(Rohit Vaid can be contacted at [email protected])