Progress of monsoon, referendum on Britain exit from EU to dictate trend

Global trend, FII stance, crude oil and rupee movement will be closely monitored by investors

Markets finished the week on a flat note as investors remained edgy on worries about a potential exit by the UK from the European Union in a referendum due next week and unfavourable macro economic data.

The Bank of Japan stance and the US Federal Reserve decision to keep interest rates unchanged also dampened sentiment.

The S&P BSE Sensex fell 9.84 points to settle at 26,625.91 and the Nifty50 rose 0.15 points to settle at 8,170.20.

"Market movement next week will depend upon the referendum on the Britain exit from the European Union. The medium trend looks strong and a move above 8,250 will bring back the momentum which is missing at present. On the downside, 8,070 level is likely to provide support," says Rohit Gadia, Founder & CEO, CapitalVia Global Research.

KEY EVENTS

The Bank of Japan (BoJ) on 16 June 2016 kept monetary policy steady as was widely expected and the US Federal Reserve on 15 June 2016 left interest rates unchanged and backed off an aggressive stance on future rate hikes.

Back home, data released by government on 14 June 2016 showed that the inflation based on wholesale price index (WPI) rose 0.79 per cent in May and data released by the government on 13 June 2016 showed that the all-India general consumer prices index (CPI) inflation increased to 21-months high of 5.76 per cent in May 2016, recording rise for second straight month.

STOCKS

Bank stocks closed mixed. HDFC Bank rose 0.7 per cent. Axis Bank shed 3 per cent and ICICI Bank dropped over 5.5 per cent.

On the flip side, State Bank of India (SBI) gained 3.5 per cent after media reports stated that the government has given its go ahead for merger of 5 associate banks with SBI. On 17 May 2016, SBI had announced that it was seeking in principle sanction of the Government of India (GoI) to enter into negotiation with its 5 subsidiary banks viz. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore to acquire their businesses including assets and liabilities.

Auto stocks slipped across the board with Bajaj Auto down 0.7 per cent, Maruti Suzuki India down 0.19 per cent, Mahindra & Mahindra (M&M) down 2.4 per cent and Hero MotoCorp down 1.7 per cent.

Wipro rose 1.3 per cent after the company announced the launch of its analytics solution, Data Discovery Platform. The solution provides pertinent business insights across the value chain of an industry through the predefined “apps”.

Some of the notable gainers include GAIL up 4.7 per cent, Adani Ports & Special Economic Zone up 2.3 per cent and TCS up 1.6 per cent.

OUTLOOK

Investors will closely watch the progress of monsoon rains, global trend, FII stance, crude oil and rupee movement.

Meanwhile, Mahanagar Gas is coming up with an initial public offer (IPO) of 2.46 crore shares through a 100% book building process. The IPO will open for subscription on Tuesday, 21 June 2016 and will close on Thursday, 23 June 2016.

On global front, the UK government holds a referendum on 23 June 2016 on whether the country should remain a member of the European Union (EU).

Data on Nikkei Flash Japan Purchasing Manufacturing Index (PMI) for June 2016 is due on Thursday, 23 June 2016.