The equity markets are expected to open on a flat note on Tuesday. Analysts expect trading to remain lacklustre ahead of the holiday, while F&O stocks may see volatility due to the impending expiry of monthly June contracts. Equity markets in India are closed on Wednesday, June 28 in observance of Eid.
The market now lacks clear triggers for a further rally, said analysts who expect stock/ sector specific activities to continue.
“The benchmark indices had a lacklustre start to the week, primarily influenced by negative Chinese growth cues and a hawkish stance from the Federal Reserve. This resulted in investors struggling to come to terms with these developments, leading to a quiet day on Dalal Street. In such uncertain times, investors often seek refuge in safe haven stocks, which explains the outperformance of the pharmaceutical sector,” said Prashanth Tapse, Senior VP (Research), Mehta Equities
SGX Nifty at 18,735 indicates another flat opening for domestic markets, as Nifty July futures on Monday closed at 18,806 and June futures at 18,717.
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Investors will closely monitor the speech by Federal Reserve Chair Jerome Powell scheduled for June 28-29, as his remarks could provide further insight into the central bank’s monetary policy stance. Additionally, there might be heightened volatility in the market until the expiry of the June series F&O contracts on Thursday, June 29, he added.
Focus on monsoon
Analysts said the focus will be on the progress of the monsoon. With El Nino fears, experts believe rains will be lower and that could impact the rural consumption.
Mitul Shah - Head of Research at Reliance Securities, said: “The delay in monsoon rains and possible onset of the El Nino form of weather in the later part of this year is triggering caution among policymakers. However, economic activity has held up well so far in Q1FY24 and there is increased optimism on the domestic economy.”
During the week, the RBI will release the money supply, deposits, bank credit growth data. The Central Government will update the budget expenditure and deficit numbers for the month of May. On the global front, the US Federal Reserve Chair Jerome Powell, will deliver a speech at the European Central Bank forum on Central Banking 2023, he said.
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Meanwhile, foreign portfolio investors, too, slowed down their investment activity.
“We expect the market to consolidate in the near term before resuming the upward journey. Sectors like Auto, and FMCG would be in focus with the progress of the monsoon,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services. The primary market is also in a buzz with the Ideaforge IPO being subscribed 2.5x on the first day itself, while Cyient DLM IPO will be open for retail participants on Tuesday, he added.
Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said: Global markets are dictating trends back home and investors don’t want to be in a hurry to take long positions amid uncertainty. Technically, after a short-term correction the index witnessed range bound activity near 18650 or 20-day SMA (Simple Moving Average) important support level. For day traders, 18725 would be the key resistance level, while 18650 could be the crucial support zone. Above 18725, a fresh uptrend rally could be seen till 18800-18820. On the flip side, below 18650 selling pressure is likely to accelerate and could slip till 18600-18550.”