The week ahead may seem listless after three weeks of rollercoaster ride beginning with the exit poll results during which the benchmark indices hit new highs twice. The Bharatiya Janata a Party's (BJP) dream performance under Prime Minister Narendra Modi in the Lok Sabha election and the smooth transition to Modi 2.0 have kept the market buoyant, but global cues have been keeping indices under pressure.
The National Stock Exchange (NSE) benchmark Nifty fell back below the key 12,000 points last week and the Bombay Stock Exchange (BSE) index Sensex dipped under 39,000 points.
The market snapped its rally of three consecutive weeks on June 7 as the bears managed to claw back Dalal Street from the bulls. Traders booked profit after the Reserve Bank of India (RBI) monetary policy committee decisions went in line with expectations, but offering nothing more, a media report said. Nifty closed below the psychologically important level of 12,000 points twice.
The liquidity crisis plaguing non-banking finance companies (NBFC) exacerbated by the Dewan Housing Finance Corporation Limited's (DHFL) default on debt repayment, worsening US-China trade war tensions and a possible delay in monsoon dented market sentiment, the report in MoneyControl website said. Short covering was seen in banking and financials.
The 30-share Sensex shed 0.25 percent and the Nifty50 lost 0.44 percent in the week that ended on June 7 against its more than 5 percent rally in the previous three straight weeks. There are no major cues barring the release of the industrial output and inflation data in the coming week and the market is expected to remain rangebound with more openings for a more stock specific action, the report says. The market will be on edge watching the monsoon updates and any triggers in the upcoming Union Budget FY20, experts said.
The reaction of the global markets in response to developments in the US-China trade tensions will also be closely watched. The global markets have somewhat factored in the tensions and seemed to relax on Friday, ending their losing streak. This could act as a major cue for the Indian markets.
"Indications are mixed at present which could result in further consolidation in Nifty. Traders should opt for a stock-specific trading approach and maintain positions on both sides," the report quoted Jayant Manglik of Religare Broking as saying. His view is that the progress of the monsoon and global cues would largely dictate the market trend in the week ahead.
"We remain in a structural uptrend for the markets but expect consolidation for the near term. A range-bound movement at 11,700-12,100 for the next few weeks is expected," the report said quoting Sahaj Agrawal of Kotak Securities. The market will be keenly listening to what Finance Minister Nirmala Sitharaman has to say about the preparations for the FY20 Union Budget, scheduled to be presented on July 5.
