Sensex flirts with 27,000; top five events to track in coming week

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NEW DELHI: The S&P BSE Sensex rose just about 0.7 per cent during the week ended June 3, but failed to close above its crucial psychological level of 27,000.

The Nifty50 rose o.8 per cent in the same period and closed above its crucial support level of 8,200. Last week the Nifty50 moved in a range between 8,134 and 8,262 levels and managed to close at 8,200. Sectoral indices such as auto and metals delivered 3.8 per cent and 5 per cent returns, respectively.

Pharma stocks were among the top losers last week, down 2.7 per cent, followed by the BSE Consumer Durables index, which fell about 2.7 per cent, and the Capital Goods index lost 1.1 per cent.

The benchmark indices have risen over 20 per cent from their Budget day low and looks set to hit the 28,000 mark by March 2017.

Citigroup Global Markets has raised its March 2017 target for the S&P BSE Sensex to 28,800 from 27,000, stating that it remains constructive on the Market due to encouraging macroeconomic data and earnings recovery.

ETMarkets.com had collated a list of top five events that are likely to influence market direction over the coming week:

RBI monetary policy: A major event to track this week is the Reserve Bank of India’s (RBI) policy review due on Tuesday, June 7, 2016. The outcome would steer the market over the short term.

Market participants expect RBI to maintain status quo ahead of the policy meeting of the usFederal Reserve due in the third week of June as well as the Brexit vote. However, future commentaries on rate cuts are something most market participants would watch carefully.

“We expect RBI to be in a wait-and-watch mode in the June 7 policy review. We continue to maintain our call for a 25 bp rate cut in August on the back of our assumption that monsoon rains will be adequate,” HSBC said in a report.

Monsoon rains: Timely arrival of monsoon rain will be one of the biggest triggers that boost the market next week. Earlier this week, the Met department said it retained its monsoon forecast for the year at 106 per cent of the long-term average.

A good monsoon after two years of drought is essential to boost agricultural income and bring down inflation, which are key factors for RBI to decide on interest rates and boost consumption.

“Monsoon is far more important for us than what the US Fed does. I expect the RBI governor to stay put and wait to see the monsoon outcome,” Shobhit Mehrotra, Senior Fund Manager & Head of Credit, HDFC Asset Management, said in an interview with ET Now .

“The RBI governor would have more room to cut rates if monsoon progresses evenly by August,” Mehrotra said. “Hopefully, the progress and special distribution of monsoon by then should be clear and he should be in a position to act,” he said.

PSU bank meeting: PSB stocks will be in focus ahead of the performance review meeting on Monday. Goss NPAs or bad loans of PSBs rose from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December.

Finance Minister Arun Jaitley will soon hold a quarterly performance review with the heads of PSBs and financial institutions. He would “review the overall performance of PSBs during the financial year 2015-16 as well as with regard to the flow of credit to agriculture, insuranceand MSE sectors among others.”

IIP data on Friday : Market participants will eye IIP numbers for April, which will be out on Friday. The IIP print fell sharply to 0.1 per cent in March from 2 per cent in February. An uptick in IIP data in April will be cheered by markets.

The Index of Industrial Production (IIP) rose at a subdued pace in March, as manufacturing growth, which constitutes roughly three-fourths of the index contracted by 1.2 per cent.

Technical indicators: T he Nifty50 closed about its crucial resistance level of 8,200 and looks set to clear its next major hurdle placed at 8,250-8,333. The Nifty June futures saw a closing above its previous six months’ high and above the key support level of 8,200.

“Technically, Nifty is trading above the important support of 8,150. If Nifty50 breaches this support and sustains it, it might test the next level of support at 8,000,” Rohit Gadia, Founder & CEO, CapitalVia Global Research, told ETMarkets.com.

“On the upside, the 8,275 level is likely to act as resistance. Today, Nifty50 crossed this resistance but did not manage to sustain above it. If it manages to sustain above this level we can expect Nifty to test the next level of 8,350,” he said.