WEEK AHEAD: MACRO DATA, F&O EXPIRY, GLOBAL CUES AMONG KEY MARKET TRIGGERS AS NIFTY EYES 24,000 THIS WEEK
Indian markets have approached the middle of the year with a roller-coaster movement in the first six months of 2024. The Union Budget in July is likely to trigger the next big movement after the recent Lok Sabha election showdown.
In the fourth and last week of June, investors will keenly eye any Union Budget-related or government policy announcements as they may result in stock-specific action. Domestic and global macroeconomic indicators, foreign fund inflow, crude oil prices, and global cues will drive market movement this week.
The Indian stock market exhibited positive trends and continued to consolidate for another week ending almost unchanged amidst mixed cues. Domestic equity benchmarks Sensex and Nifty indices both posted minor gains of 0.2 per cent, marking their third consecutive week of growth. The Nifty hovered close to its all-time high, closing at 23,501.10 after trading within a narrow range.
On the weekly front, the BSE benchmark climbed 217.13 points or 0.28 per cent, while the Nifty went up by 35.5 points or 0.15 per cent. The Nifty Bank index, in particular, stood out with its largest weekly gain of 2024, surging by more than three per cent. This impressive performance also signifies the Nifty Bank's longest winning streak in 19 months, as it recorded gains for the sixth straight week.
The bright spot was IT stocks, which gained 0.76 per cent after the US peer Accenture gave an upbeat annual revenue growth forecast, signalling demand in the key US market. Indian private banks gained 4.17 per cent this week, the most among Nifty sectors.
The market is expected to trade sideways next week due to the absence of strong buying or selling triggers. While the underlying sentiment remains bullish, dips might attract opportunistic buying, which could support the market. However, strong rallies may be capped by profit booking.'' said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.
Sector-specific movements are anticipated amid budget-related buzz, according to most analysts. The key factors to watch include the progress of the monsoon, which will be closely monitored for its near-term impact to gauge the overall sentiment and investor confidence. The GST meeting may result in rate adjustments in certain sectors, potentially influencing market direction.
"The Indian market initially continued its upward trend as concerns over election outcomes eased and global sentiment improved. With a coalition government in place, there is optimism that the upcoming budget will strike a balance between growth initiatives and populist measures,'' said Vinod Nair, Head of Research, Geojit Financial Services.
‘’Expectations are high for some government actions aimed at stimulating consumption, a critical area to focus on. Strong institutional inflows post-government formation, have further bolstered market sentiment. However, profit booking emerged on concerns about the slow progress of the monsoon. Heatwaves in northern India remain a key concern,'' added Nair.
Also Read: Tata Motors vs Bajaj Auto: Which auto stock should you bet on for long-term? Here's a 5-point analysis
In the coming week, primary markets will witness intense action as several new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segment. The week will be critical from the domestic and technical point of view as investors will track global cues, Budget-related updates, and macroeconomic data.
Overall, market analysts expect that the tone is likely to remain optimistic as volatility related to election jitters has significantly gone down. Nifty 50 may move towards 24,000 on the upside if it stays over 23,600. They added that a gradual up-move is expected, however, markets may still witness some volatility this week due to the scheduled expiry of June month derivatives contracts. Experts advise traders to remain cautious and focus on budget-related stocks.
Here are the key triggers for stock markets in the coming week:
10 new IPOs, 11 listings to hit D-Street
In the mainboard segment, two new IPOs including Allied Blenders IPO and Vraj Iron and Steel IPO will open for subscription on June 25 and June 26 respectively. Among the ongoing issues, Stanley Lifestyles IPO will close for bidding on June 25.
In the SME segment, Shivalic Power Control IPO, Sylvan Plyboard IPO, Mason Infratech IPO, and Visaman Global Sales IPO will open for subscription on June 24. Akiko Global Services IPO, Divine Power IPO, and Petro Carbon and Chemicals IPO will open for subscription on June 25. Diensten Tech IPO will open for bidding on June 26.
Among the ongoing issues, Dindigul Farm Product IPO and Winny Immigration IPO will close for bidding on June 24. Medicamen Organics IPO will close on June 25.
Among listings, shares of DEE Development Engineers and Akme Fintrade India will debut on BSE, NSE on June 26. Shares of Stanley Lifestyles will get listed on June 28. Also on June 24, shares of United Cotfab and GP Eco Solutions India will debut on BSE SME and NSE SME respectively.
On June 26, shares of GEM Enviro Management will debut on BSE SME, while shares of Durlax Top Surface and Falcon Technoprojects will get listed on NSE SME. On June 27, shares of Dindigul Farm Product will debut on BSE SME and shares of Winny Immigration will get listed on NSE SME. On June 28, shares of Medicamen Organics will debut on NSE SME.
FII Activity
Foreign Institutional Investors (FIIs) were net buyers, purchasing ₹9,102.87 crore in Indian equities last week, adding positive sentiment to the market. Also, foreign portfolio investors (FPIs) finally snapped their two-month selling streak in Indian equities this month after stability returned to Indian markets with a fall in the 'VIX' volatility index.
FPIs invested ₹12,170 crore worth of Indian equities and the net investment stood at ₹25,085 crore as of June 21, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. The total debt inflows stand at ₹10,575 crore till the third week of June. This comes after FPIs offloaded ₹5,586 crore worth of Indian equities in May.
Global Cues
On the global front, major economic data like the US Q1 GDP data and the US core PCE price index will be released on June 27 and June 28 respectively. The movement of the US dollar index and US bond yields will be crucial. Along with these, US initial jobless claims, UK GDP, and US Fed minutes will also be released this week.
‘’This week promises to be pivotal for global markets. Economic indicators from Australia, the US, and China will not only provide insights into current inflation trends and economic health but will also likely influence central bank policies and market sentiment. These developments will be essential for traders and investors looking to navigate potential shifts in market dynamics,'' said Alex Volkov, Market Analyst at VT Markets.
On June 28, the US core personal consumption expenditures (PCE) price index will be closely watched by market observers as recent US consumer and producer price data for May indicated downside surprises, reflecting further progress in inflation control.
The PCE price data --the US Fed’s preferred inflation gauge, will be scrutinized for signs of continued progress. Further progress in inflation control could provide the Fed with greater flexibility around upcoming rate cuts.
‘’Looking ahead, attention will remain on updates related to the budget and global market cues, particularly from the US. The Dow Jones Industrial Average recovered significantly following a slight decline, while the Nasdaq Composite and S&P 500 reached new record levels, suggesting a positive sentiment overall,'' said Ajit Mishra – SVP, Research, Religare Broking Ltd.
Oil Prices
International crude oil prices eased about one per cent in the previous session on worries that the global oil demand growth could be hit by a strong US dollar and negative economic news from some parts of the world. Oil prices declined despite signs of improving oil demand in the US and falling fuel inventories that helped boost crude prices to hit seven-week high throughout last week.
Brent futures fell 47 cents, or 0.6 per cent, to settle at $85.24 a barrel, while US West Texas Intermediate crude (WTI) ended 56 cents, or 0.7 per cent, lower at $80.73. The decline pushed WTI out of technically overbought territory for the first time in four days, while Brent futures remained overbought for a fourth day in a row for the first time since early April.
For the week, both crude benchmarks were up about three per cent after gaining about four per cent the week before. The US dollar rose to a seven-week high compared to a basket of other currencies with the US Federal Reserve's patient approach to cutting interest rates contrasting with dovish stances elsewhere.
The US Fed hiked interest rates aggressively in 2022 and 2023 to tame a surge in inflation. The higher rates boosted borrowing costs for consumers and businesses, which can slow economic growth and reduce the demand for oil.
A stronger US dollar can also reduce the demand for oil by making greenback-denominated commodities like oil more expensive for holders of other currencies. Heightened geo-political tensions in the Middle East is likely to prop up the risk premium on crude oil this week, supporting price uptrend.
Corporate Action
This week is brimming with corporate action as stocks of several companies will trade ex-dividend, ex-split, and ex-bonus. IndusInd Bank, Titan Company, Voltas Ltd, REC Ltd, Bank of Baroda, Bajaj Holdings & Investments, among others will trade ex-dividend. Share India Securities will undergo a stock split. Check full list here
Technical View
Although volatility may increase following two weeks of subdued activity, the outlook is expected to stay optimistic, buoyed by strong performance in banking and early signs of a rebound in the IT sector, according to market experts. Volatility may be heightened by the scheduled expiration of June month derivatives contracts.
‘’In the case of profit-taking, the Nifty index is anticipated to find support in the 23,100-23,300 range, while a decisive close above 23,600 could propel it towards a new milestone at 24,000. Besides banking and IT, optimism is noted in the metals sector, and traders are advised to selectively explore budget-related opportunities in agriculture, defense, and railways for potential long trades,'' said Religare Brokings' Ajit Mishra.
Daily chart analysis indicates that Nifty has been consolidating within a broad range of 23,400 to 23,700, and this trend is likely to continue,according to Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
‘’There are no significant triggers for aggressive buying or selling at present. Despite this consolidation phase, the market's undertone remains bullish, suggesting that buying on dips will lend resilience to the market. However, strong upward movements are expected to attract profit booking, making a sustained rally challenging,'' added Nanda.
Bank Nifty continued its bullish continuation, closing the session above the critical 51,500 level, where substantial call-side open interest has accumulated. To confirm an upward trend towards the 53,000 level, the index must decisively break the 52,200 mark. Support is firmly established in the 50,500-49,900 zone, and a break below this range could trigger further downside movement towards 49,000, according to Nanda.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
2024-06-23T01:17:47Z dg43tfdfdgfd