Domestic, global cues to set the tone for markets

Overcoming wild swings, the domestic stock market had an incredibly eventful week as they reacted to the exit polls and the actual general election results. The market posted its strongest week of 2024. The benchmark indices recorded a three percent gain since last Friday, rising as much as 10 per cent from Tuesday low, the day when election-related jitters had spooked investors. The anticipation of stability within the coalition government at the centre, coupled with the RBI’s upward revision of its growth forecast for FY25 to 7.2 percent turned the sentiment positive. Despite Indian benchmark indices ending with strong gains this week, FPIs have remained unenthusiastic in June so far, off-loading Indian equities worth Rs14,794 crore. It is pertinent to observe that in 2024 year-to-date, FPIs have off-loaded stocks worth Rs38,158 crore.

After the huge volatility witnessed in the market in response to the election results (both exit polls and actual results), the market is slowly stabilising. An important point to consider is the high valuations of Indian stocks, particularly in the broader market. The Index of Industrial Production (IIP) data is expected to slow down to 3.9 percent in May from 4.9 percent in April. While it is unlikely the US Fed will cut the rate when it meets this week on June 11 & 12, the Street will be looking at its commentary on inflation and economy post the rate cut by the European Central Bank (ECB). After the allocation of ministerial portfolio’s takes place over the next few days, markets may shift their focus to spread of monsoon, expectations over Q1 earnings, macro-economic numbers like GDP growth, monthly GST collection and FII flows. Speculation over contours of Union Budget may trigger some sharp moves in the markets in coming weeks.

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Mirroring the heightened volatility in the cash market, the derivatives segment witnessed a huge surge in volumes on alternate bouts of buying and selling. On a weekly basis, Nifty outperformed, closing with a gain of over three per cent, while Bank Nifty rose by more than 1.5 per cent. In the options segment, the highest Call Open Interest was seen at the 23,500 strike and the highest Put Open Interest at the 23,000 strike.

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HPL Electric & Power Ltd is a multiproduct electric equipment manufacturer. The company’s product portfolio covers a wide range of low-voltage electric products including metering solutions, switchgears, lighting products, wires and cables, solar solutions, and modular switches. 

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)