Last week, Indian benchmark indices traded in a narrow range, as anxious investors were closely tracking the debt deal negotiations in the US, which finally came through and saved the country from a credit default.
The Nifty 50 ended 0.3% higher on Friday at 18534 points, having given flat returns for the week.
However, the broader markets made up for it and performed stunningly, with as many as 20 smallcap stocks giving 20-40% weekly returns.
Thanks to the strong momentum in the broader market, analysts have held onto their positive stance on the market and see scope for benchmark indices to hit fresh lifetime highs.
“The equity market has been holding quite well, buoyed by the better than expected national income data, encouraging manufacturing PMI, and finally, a closure to the US debt ceiling discussions. The positive sentiment created by these events may linger on for some more time,” said Joseph Thomas, head of research, Emkay Wealth Management.
However, the sustenance of momentum and indices scaling new highs hinge upon the Reserve Bank of India and Federal Reserve’s verdicts.
The RBI has its three-day meeting this week, and the US Fed has its two-day meeting in the following week. RBI Policy
All eyes will be on the RBI’s policy meeting from June 6-8 to know if the central bank will hold on to rates yet again.
“The best case for the June policy would be a softer ‘stance’ by the MPC,” said Churchil Bhatt, executive VP and debt fund manager, Kotak Mahindra Life Insurance Co.
In June, MPC is likely to maintain a status quo on rates, and everyone will be closely following the speech of the RBI governor, Bhatt added.
With the earnings season coming to an end, investors will watch out global markets for cues in early trade.
While the US has managed to avert a credit default by reaching a deal on suspending the ceiling, investors will keep a tab on developments unfolding in the country.
Among data points, the composite services PMI will be released across India, the US, UK, European Union, and China. Besides, the trade data will be released in the US.
One of the main reasons why India performed much better than many other emerging markets in the last two months was due to constant inflows from foreign institutional investors.
FIIs invested over Rs 43,800 crore through the stock market and primary market together in May, according to NSDL data.
“FPIs are likely to continue their investment in India in June too since the latest GDP data and high frequency indicators reflect a robust economy gaining further strength,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.
A survey among foreign portfolio investors showed that India is now the consensus overweight among all emerging markets.
SBI Cards is slated to have a board meeting next week to consider raising funds aggregating Rs 3,000 crore through debt.
Meanwhile, the lock-in periods for anchor investors opens for many of the recently listed companies such as Mankind Pharma, Divgi Torq Transfer, Tega Industries, and Uniparts India. As a result, these stocks will be on investors’ radar.
Two Tata Group companies – Tata Consumer Products and Tata Motors are scheduled to conduct their annual general meetings with shareholders next week. Tata Consumer’s AGM is on June 6 and that of Tata Motors on June 7.
The initial public offer of IKIO Lighting is scheduled to open on June 6 and close on June 8. The IPO comprises fresh equity issue of up to Rs 350 crore and an offer for sale (OFS) of up to 90 lakh shares. The Noida-based company has fixed a price band of Rs 270-285 per equity share.
On technical charts, the Nifty 50 has formed a small bodied Bearish candle and an inside bar on daily scale with longer lower shadow, indicating support based buying is intact, said Chandan Taparia of Motilal Oswal Securities.
Sameet Chavan of Angel One believes if global markets support, one can construe last week’s price development as a pull back, and see Nifty resuming its upwards trajectory in the forthcoming week.
“This view remains valid as long as the cluster of support around 18460-18400-18330 is not violated on a closing basis in the next couple of sessions,” Chavan said.
On the flipside, the sturdy wall is visible around 18600-18670, and the moment it is surpassed, the index may soon challenge its lifetime high.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)