Sensex, Nifty next week: Domestic macros, key US data, and FII Investment trends, here are the key factors that may guide the D-street?

Indian stock markets ended the last week at record high levels gaining over two percent during the week.  The coming week marks the start of new month and auto stocks would be buzzing on reporting monthly sales figures.

Investors would be watching out HSBC Manufacturing PMI Final scheduled to be released on July 01. The HSBC India Manufacturing PMI increased to 58.5 in June 2024 from May's three-month low of 57.5, preliminary estimates showed. HSBC Composite PMI Final, HSBC Services PMI Final scheduled to be released on July 03. Foreign Exchange Reserves data going to be out on July 05. 

Nifty Outlook: Deepak Jasani, Head of Retail Research at HDFC Securities said, Nifty snapped its four-day record run to end lower on June 28. At close, Nifty was down 0.14% or 33.9 points at 24010.6.  

However, on weekly charts, Nifty rose for the fourth consecutive week (up 2.17% - the largest weekly gain in 5 months) to record its best month so far this year. “On weekly charts, the Nifty formed a large bull candle breaking out of a range. On monthly charts, Nifty gained 6.57% - the largest monthly gain in 6 months. Nifty could face resistance from the 24174-24380 band while support could come in at 23338 in the near term. Nifty is defying all expectations of giving even a small correction", Jasani said.

Bank Nifty: Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities commented The Bank Nifty index experienced its first meaningful correction after a nonstop rally in the past week. For the selling pressure to continue, there needs to be follow-up selling; otherwise, the index may get stuck in a consolidation range. “The immediate support is at 52000, where the highest open interest is built up on the put side, while the immediate resistance lies in the 52700-53000 zone", Shah said.

Foreign investments: According to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FPI’s investment of Rs 26,565 crore in equity in June marks a reversal of their strategy of selling in the two preceding months. Political stability despite the BJP not getting majority on its own, and the sharp rebound in markets aided by steady DII buying and aggressive retail buying, has forced the FPIs to turn buyers in India. He commented “It appears that FPIs have realised that selling in the most performing market would be a wrong strategy. FPI buying can sustain provided there is no sharp up move in U.S. bond yields”.

Vijayakumar added, India’s inclusion in the JP Morgan Bond Index is certainly positive. The debt inflows for 2024 so far stands at Rs 68,674 crores. In the long term this will reduce the cost of borrowing for the government and reduce the cost of capital for corporates. This is positive for the economy and therefore for the equity market.

“First fortnight data in June from the NSDL shows FPI buying in realty, telecom and financials. FPIs were sellers in IT, metals and oil and gas. The FPIs are likely to continue the buying trend in financials” Vijayakumar said.

US market data: On the global front, investors would be eyeing few economic data from world’s largest economy the US, starting with Fed Williams Speech on June 30, followed by S&P Global Manufacturing PMI Final, ISM Manufacturing Employment, on July 01, Redbook, Fed Chair Powell Speech, JOLTs Job Openings on July 02, Balance of Trade, Initial Jobless Claims, S&P Global Composite PMI Final, and FOMC Minutes on July 03, Non - Farm Payrolls, Unemployment Rate, Government Payrolls, on July 05.

Global factors: Vinod Nair, Head of Research at Geojit Financial Services said, On the global front, the rise in US jobless claims and weak housing data have raised expectations of a rate cut in September. For the week ahead, focus will be on the release of US & Indian manufacturing PMI data and the FED Chair’s speech. “The undercurrent is positive, with no major risk visible for the domestic market in the short term. All eyes will be on the union budget proposals which will dictate the market in the medium term”, Nair said.