May F&O expiry, global trend to set tone for mkts

Quarterly results, monsoon, crude oil movement will be closely watched

Markets declined during the week after prospects of an interest rate hike by the US Federal Reserve in June dented sentiments. Persistent foreign fund outflow and a weak rupee added to the woes.

Meanwhile, a win for the Bharatiya Janata Party in Assam and support from the Trinamool Congress (winner in West Bengal) for the passage of the goods and services tax (GST) Bill failed to cheer the market after the Securities and Exchange Board of India (Sebi) tightened norms for participatory notes (P-notes).

In the week ended May 20, 2016, the S&P BSE Sensex shed 188 points, or 0.7 per cent, to settle at 25,302 and the Nifty50 dropped 65 points, or 0.8 per cent, to settle at 7,750. Meanwhile, the broader markets underperformed the larger peers with BSE Midcap index losing one per cent and BSE Smallcap index dipping one per cent.

“The Fed minutes released this week will continue to drive nervousness next week, which is the last week of the results season. We do not see any near-term trigger for the Nifty to take out the 8,000 level. My advice is to play it by the ear and remain stock-specific,” said Ravi Shenoy, vice-president (mid-caps research) at Motilal Oswal Securities.

Back home, Sebi announced tightening the regulations for issuers and subscribers of offshore derivative instruments (ODIs) or P-notes with a view to enhancing the transparency and control over the issuance of ODIs.

Key stocks
Cigarette maker ITC gained three per cent after the net profit of the company rose 5.6 per cent to Rs 2,495.20 crore on 9.49 per cent rise in the total income to Rs 10,580.33 crore in the March 2016 quarter over the year-ago period.  

State Bank of India slumped 7.3 per cent after it decided to seek the government’s sanction to enter into negotiation with its five subsidiary banks  to acquire their businesses including assets and liabilities.

Maruti Suzuki India climbed 2.6 per cent. The car major announced on May 19 that it would undertake a service campaign to inspect fault and replace a brake part in 20,427 units of its S-Cross model.

Outlook
March quarter results, progress of monsoon, trend in global markets, foreign institutional investor stance and movement of rupee and crude oil will dictate trend on the bourses next week.

The market might remain volatile as traders roll over positions in the futures & options segment from the near-month May series to June series due on Thursday. Also, investors will closely track the next batch of March quarter results. Bharat Petroleum Corporation, Tata Power, Cipla, Tech Mahindra, Bajaj Auto, GAIL (India), Tata Steel, Larsen & Toubro, Bharat Heavy Electricals, State Bank of India and Coal India, among others, will announce their fourth quarter results next week.