Indian Markets Outlook for the week – 16 to 20.Jun.2014
(For Sectorwise Weekly Outlook Watch: www.rupeedesk.in)
Global developments will be key for Indian share indices next Week as geopolitical
tensions in Iraq triggered a selloff across global equities yesterday. We will also take
cues from the outcome of US Federal Open Market Committee's two-day policy meeting
on Tuesday and Wednesday. The week will begin with the release of Wholesale Price
Index-based inflation data for May on Monday.
According to a Cogencis poll, the WPI inflation rate is likely to rise to 5.3% from 5.2% in
April, due to statistical impact of a low base and lingering effects of high food prices.
The 1.09-rupee-per-ltr increase in diesel prices during May will also intensify upward
pressure on inflation. Yesterday 'Friday the 13th', equities witnessed across-the-board
selloff, bogged down by the rupee, which hit a one-month low and global crude oil
prices, which rose to a nine-month high amid the civil war in Iraq. If the tensions in Iraq
show no signs of abating, indices may see some more selling. Indices are likely to
remain under pressure depending on how long the Iraq crisis lasts. The market has run
up ahead of fundamentals in the last few months and so, such corrections happen.
That's when the convictions surrounding expectations get challenged.
Indices had run up over 20% since March on India election-related euphoria and hopes
that the new government will push economic reforms. With the markets having
witnessed sharp gains, the scope for compression in multiples is very large. For further
gains, it is very important for the index to cross the 7700 mark decisively. Yesterday, the
Nifty ended at 7542.10, down 107.80 points or 1.4%. Intraday, the index fell 1.6% to
touch a low of 7525.35 and rose substantially to touch a high of 7678.50. The S&P BSE
Sensex closed at 25228.17, down 348.04 points or 1.4%, after hitting intraday low of
25171.61 and a high of 25688.31.
Rate-sensitive stocks may witness further profit-booking next week while defensive
stocks may gain if the rupee weakens further. Monday, stocks of Idea Cellular may rise
as the Reserve Bank of India has said that foreign institutional investors can now buy up
to 49% in the telecom company.(For Sectorwise Weekly Outlook Watch: www.rupeedesk.in)
