In the passing week, Indian markets posted marginal gains amid the Reserve Bank of India’s (RBI) decision to keep the policy repo rate unchanged at 6.50 per cent for the second time in a row. This week, market participants would be eyeing the data of the Index of Industrial Production (IIP) scheduled to be released on June 12. On the same day, Consumer Price Index (CPI) data for May, is scheduled to be released. The annual inflation rate in India slowed sharply to 4.7 per cent in April of 2023, the lowest since October of 2021, from 5.7 per cent in March, and slightly below forecasts of 4.8 per cent.
In another major event, investors will have an eye on Wholesale Price Index (WPI) scheduled to be released on June 14. The wholesale manufacturing prices in India decreased by 2.42 percent year-on-year in April 2023, the second straight month of fall. Imports and exports data are scheduled to be released on June 15, and banks' deposit growth data on June 16.
Market veteran Vinod Nair, Head of Research at Geojit Financial Services, said that the market trimmed some of its initial gains after a couple of volatile trading sessions at the end of last week. “Market participants are now eagerly awaiting the release of domestic inflation data for May, which is anticipated to show a cooling down from the current level of 4.7 per cent. Global cues will also play a significant role in shaping the market trend, with investors closely monitoring the outcomes of the FOMC meeting and the US inflation print."
US market data: On the global front, investors would be eyeing a few economic data from the world’s largest economy, the United States (US), starting with consumer inflation expectations on June 12, followed by CPI, Redbook on June 13, Producer Price Inflation (PPI), Fed Interest Rate Decision, FOMC Economic Projections on June 14, Fed Press Conference, Retail Sales, Philadelphia Fed Manufacturing Index, Initial Jobless Claims, Imports and Exports data, IIP on June 15 and finally Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on June 16.
Foreign Investment trends: Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that In May, globally, FPIs were big buyers in Japan, South Korea, Taiwan, and India and big sellers in China. This trend continues in June also. “In May, FPIs invested Rs 43,838 crore in India through stock exchanges and the primary market (Source: NSDL) FPIs invested in financials, autos, auto components, capital goods, and FMCG. They were big buyers in financials and autos. Selling was low but was focused on IT and metals."
He added, "The sustained buying by FPIs has lifted the Nifty by around 10 per cent from the March lows and consequently, valuations, viewed from the short-term perspective, have become challenging. Therefore, FPI is likely to slow down in the coming days. They are likely to continue buying in financials and autos since the prospects of these sectors look promising."
Outlook for the coming week: Deepak Jasani, Head of Retail Research at HDFC Securities said that most Asian stocks rose on Friday, as weak US labor data ramped up bets on a pause in the US Fed’s rate hike cycle, although disappointing inflation readings from China capped broader gains. European stocks slipped at the open on Friday as traders were cautious ahead of the policy meetings of key central banks next week. He said: “The inflows into Indian equity mutual funds slumped by 50 per cent in May to Rs 3,240.30 crore as investors took some money off the table. May equity inflows have been the lowest since November 2022, when the number stood at around Rs 2,500 crore. Despite the fall, equity fund inflows have remained in the positive zone for 27 straight months now. Monthly contributions to the SIP increased 7.44 per cent to Rs 14,749 crore in May."
Jasani added that the Nifty fell for the second consecutive session on June 9. It gained 0.16 per cent over the week after giving up the gains early in the week. It formed a bearish pattern on weekly charts. A close below 18,508 could result in an acceleration in the downtrend. On up moves, 18,726 could act as a resistance.
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