Macro-data, global cues to set the course of equity indices (Market Outlook)

Upcoming macro-economic data points, coupled with global cues, especially the upcoming US Federal Reserve's rate-setting meet and expectations of a revision in Goods and Services Tax (GST) sub-rates will determine the trajectory of equity indices next week, market observers opined.

According to analysts, investors' risk-taking appetite might also regain strength on account of the upcoming meeting between Finance Minister Arun Jaitley and top executives of public sector banks on the sector's non-performing assets (NPAs) issue.

"The Consumer Price Index (CPI) for May is expected to be lower, asserting the need for a rate cut by the Reserve Bank of India (RBI). Light crude prices are lower by 11 per cent in the last one month, which is a large positive for India," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

"The global risk emanating from a hung UK parliament would continue, though the negative effects will be sector-specific. Markets would also await the GST implementation and its impact."

On Sunday, the 16th GST Council meeting is likely to consider revisions in the fitment of some segments in the tax slabs of sub-rates.

Just a day after the GST Council's meet, the Central Statistics Office (CSO) will release the macro-economic data points of Index of Industrial Production (IIP) and Consumer Price Index (CPI).

The CPI data will be followed by the release of Wholesale Price Index (WPI) by the Ministry of Commerce and Industry on June 14 and the monthly trade data on Thursday.

Apart from the macro-economic data points, investors will be looking forward to the outcome of the meet ing between Jaitley and top executives of public sector banks.

"Having undergone significant correction over a month, any positive outcome from discussion on NPA resolution might bring in immense buying interest in banking stocks," said Anand James, Chief Market Strategist at Geojit Financial Services.

The US Federal Reserve's rate-setting meet will be held on June 13-14, 2017.

Subsequently, investors will remain cautious over the possibility of an interest rate hike during the US Federal Open Market Committee (FOMC) meet.

A hike in the US interest rates can potentially drive away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

"Chances of interest rate hike are slim but the commentary will give a fair idea about hike of interest rate projectile this year," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

Stock-wise, last week's decision by the RBI to reduce the statutory liquidity ratio by 50 basis points is expected to support the scrips of housing finance companies.

"With RBI turning contingently dovish, the support to NBFC, housing finance stocks would continue," Nevgi explained.

On technical-levels, the NSE Nifty is expected to remain in an intermediate uptrend.

"Technically, with the Nifty surging higher to new life highs, the index remains in an intermediate uptrend," Deepak Jasani, Head, Retail Research with HDFC Securities, told IANS.

"Further upsides are likely once the immediate resistances of 9,710 points (level) is taken out. Crucial supports to watch for weakness is at 9,608 points (level)."

Last week, key equity indices were able to pare their losses to close on a flat-to-positive note, as investors sentiments were buoyed on optimism over the approaching GST execution, coupled with higher fund inflows and value buying.

Consequently, the barometer 30-scrip S&P BSE Sensex inched down by 11.23 points or 0.04 per cent to 31,262.06 points, while the wider NSE Nifty rose by 14.75 points or 0.15 per cent to 9,668.25 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)

--IANS

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