New Delhi : After a near 4% rout last week, a host of macroeconomic factors such as Index of Industrial Production and consumer price index-based inflation data, global crude oil prices and progress of southwest monsoon will set the tone this week for domestic markets, which experts believe may remain volatile.
Last week, equities were hammered on concerns over no further rate cut in the near future, volatility in the global bond market and weak monsoon prospects. The debt negotiations between Greece and its lenders, will also be eyed, they said.
“Going forward, the progress of the South West monsoon, which hit Kerala a few days delayed, will be on market radar. Further, industrial production (IIP) and inflation data will also be released on June 12. Nonetheless, with no visible triggers in sight, the market may continue to remain volatile with a possible downward bias,” said Hitesh Agrawal – Head Research, Reliance Securities.
Data for industrial production for April and consumer price index (CPI) for May is scheduled to release on Friday.
Movement of rupee against the dollar, investment trend by overseas investors and crude oil price will also influence trading. Meanwhile, southwest monsoon hit Kerala on Friday marking the start of the rainy season, four days after its normal onset date. The India Meteorological Department said conditions are favourable for its advance to states such as Karnataka, Andhra Pradesh and Tamil Nadu. The MET department had initially predicted that this year the rainy season would make its fall on May 30 with “below normal” monsoon, but later downgraded its forecast to “deficient” rainfall.
“The probability of rate hikes by Fed in coming quarters, coupled with euro zone fears and constant rise in crude prices is keeping Indian markets volatile.
We believe the markets to remain weak for upcoming trading sessions,” said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
Indian indices will on Monday react to the US jobs data where the American economy added more jobs in May than forecast. Over the past week, the benchmark BSE Sensex ended 3.8 per cent lower at 26,768.49. Greece deferred repaying its loan to the International Monetary Fund to the end of the month and has refused to accept the cash-for-reforms deal proposed by its lenders.
Foreign outflows to continue as other markets attractive: HSBC
New Delhi : Foreign investors have started to take money off the Indian markets and the trend is likely to continue as other markets such as Korea and Taiwan have become more attractive, an HSBC report said. The potential for equity outflows has increased, with foreign positions looking “stretched” in India, said the global brokerage. Moreover, it added, Indian markets experienced the first monthly outflow this year in May, while Korea and Taiwan saw inflows of $1.5 billion and $1 billion, respectively.
According to HSBC, the dynamics of the Indian market started to change early this year when investors realised that reforms were going to take longer than expected, resulting in earnings pressure, while valuations remained at all-time highs. “With no further monetary easing expected, pressure on corporate earnings, expensive valuations, high fund exposure, and weaker currency, we stay underweight India,” the report said.
