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Market Outlook: Volatality ahead of key macro data
Highlights
Slight volatility on account of subdued factory output data and upcoming inflation numbers might impact the bourses in the coming week, even as the Indian markets recover after slipping on the Greek and Chinese crises.
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Slight volatility on account of subdued factory output data and upcoming inflation numbers might impact the bourses in the coming week, even as the Indian markets recover after slipping on the Greek and Chinese crises.
Apart from the upcoming macro numbers, investors will focus on domestic issues like the first quarter (Q1) results, the monsoon's progress and the upcoming parliamentary sessions.
Market observers predict reluctance on the part of investors to place fresh bets. However, strong economic fundamentals, healthy Q1 results, bullish corporate guidance and supportive macro data might lure them back.
"For investments to pick up it is necessary for public spending to take off. There is a need for the earnings' growth to catch up with the high expectations," Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.
"While the markets have discounted another damp result season, there are hopes of a healthy outcome due to lower inflation, easing of monetary policy and a stable rupee in the quarter gone by," Nevgi added.
According to Dipen Shah, head of private client group research with Kotak Securities, the developments relating to Greece and China will have an immediate impact on the markets.
"Going ahead, the developments relating to Greek deliberations over the weekend and the situation in the Chinese stock markets will have an impact on the markets," Shah elaborated to IANS.
Shah pointed out that the investor sentiments will be determined by the outcome of a crucial meeting between Greece and its creditors during the weekend.
The Mediterranean country is expected to give a new proposal of austerity and reform measures to its creditors for a new bailout package after rejecting earlier terms set by the lenders.
The performance of the Chinese markets will also be closely monitored here. The recent downturn eroded nearly 40 percent of the stock value.
Though there has been some bounce-back in the Chinese indices, the initial inability of the Chinese government, fund houses and brokerage firms to arrest the fall is a worrying factor.
Dinesh Thakkar, chairman and managing director of Angel Broking, told IANS that the Indian markets will now focus on domestic factors going forward.
"The focus will shift back to domestic factors such as the revival of the investment cycle and the quarterly earnings," Thakkar said.
Anand James, co-head, technical research desk, Geojit BNP Paribas, foresaw slight volatility as a reaction to lower-than-expected factory output data and the upcoming Consumer Price Index (CPI) data on Monday.
On Friday, after market hours, the Index of Industrial Production (IIP) showed that retarded growth in manufacturing output slowed India's overall industrial production expansion to 2.7 percent for May - against 4.1 percent in April.
"These data points, coupled with a good progress of the monsoon, will be the undercurrent of market sentiments for some time as they will determine any chances of a future rate-cut by the Reserve Bank of India (RBI)," James told IANS.
The main trigger for the coming week will be the Q1 results and the upcoming monsoon session of parliament which will determine the passage of important bills - those on goods and services tax and land acquisition", Gaurav Jain, director with Hem Securities, told IANS.
"The first quarter results are the main event to be focussed right now. In a beaten down market, those companies that perform well are the best choice for the investors," Jain elaborated.
"We foresee a range-bound market with Nifty trading between 8,200 and 8,500 points," Jain added.
The barometer of the Indian equity markets, the 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), lost 431.39 points or 1.53 percent during the weekly trade ended July 10.
The index closed at 27,661.40 points in the week under review from the previous closing of 28,092.79 points on July 3. The downfall comes after three consecutive weeks of gains.
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