Rising oil prices, depreciating rupee, rise in US Treasury yield to above 3 per cent, weaker-than-expected results (especially select mid and small-cap companies) and Karnataka election verdict continued to weigh on the overall market sentiments.

In the week ended May 25, 2018, BSE S&P Sensex rose 76.57 points or 0.22 per cent to settle at 34,924.87, its highest closing level since May 17, 2018.

Nifty 50 index rose 8.75 points or 0.08 per cent to settle at 10,605.15, its highest closing level since May 17, 2018. While BSE Mid-Cap index closed flat, BSE Small-Cap index fell 1.01 per cent.

Continued outflow of foreign funds also had a key role in the current consolidation.

Outlook

The outlook remains cautious. “With Q4 results below estimates, FY19 estimates are likely to be downgraded. Decelerating macro trends like increase in bond yield, rising inflation, rupee depreciation and gap in current account deficit might impact market performance over the medium term,” said Vinod Nair, Head of Research at Geojit Financial Services.

Rahul Sharma, Senior Research Analyst, Equity 99, added: "Though, Nifty witnessed a sharp upside bounce in the last couple of sessions, the near term/intermediate trend status remains negative. We expect current upmove to end soon in the next few sessions, without reaching a recent high of 10,929 levels.'' ​

The saving grace for market has been information technology stocks thanks to weak rupee and  fair valuation (acting as contrarian pick for the market participants).

PSU banks can also be looked at, as a sharp short-covering in PSU banks on hopes of worst is over related to PSU banks NPA with adequate provisions, helped the PSU index to gain by 11 per cent last week.

Besides March quarter results, macroeconomic data, progress of monsoon, expiry of May futures & options (F&O) contracts, trend in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), movement of rupee against the dollar and crude oil price movement will dictate the trend on the bourses in the near term.

Among corporate earnings, NTPC, BPCL and Coal India will announce January-March 2018 results in the coming week. The government will announce the first quarter gross domestic product (GDP) data May 31, 2018.

The Indian economy expanded 7.2 per cent year-on-year in the last three months of 2017, from an upwardly revised 6.5 per cent growth in the previous period.

Progress of monsoon will be watched. Normally, the southwest monsoon arrives in Kerala by June 1. Both IMD and Skymet have recently predicted an early monsoon this year.

The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.

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