Markets To Take Cues From Upcoming Domestic & Global Series Of Events

Indian domestic markets are bulldozing on good monsoon hopes and firm macro data followed by result season which has just begun after few hits and misses. Market remains subtle as traders roll over positions from April 2016 to May 2016 series, chasing upcoming global and domestic events.

BSE Sensex and Nifty 50 have increased by 1.49 per cent and 1.61 per cent respectively in last fifteen days. FIIs bought net equity of Rs 3577.46 Crore and DIIs sold about Rs 1173 crore in Indian equity market. The strong buying by FIIs shows market condition is going to improve in near future.

As per the Indian Meteorological Department (IMD), the monsoon in 2016 is likely to be 106% of Long Period Average (LPA) after two successive droughts. Companies that are linked to rural economy would perform better in the event of favourable monsoon conditions. We can also gauge that the underutilised capital goods sector will get benefitted. On political front, the second part of budget session of Parliament commenced from Monday, April 25, 2016 and will end on May 13, 2016. With support from opposition party, Government will focus on Goods and Service Tax (GST) Bill, Bankruptcy Bill and amendments to Factory Act.

The earnings season got a kick start with Indian Big IT companies Infosys and TCS declaring their results. These two companies posted robust numbers to which market responded very well. Hand in hand, good quarter results of Bharti Airtel, Bharti Infratel, YES Bank also have tuned the market upward. On the macro data side, Negative Wholesale price Index at -0.85 which is dominated by commodities and tradable goods; and rise of prices of manufactured products, come as a relief to companies as they can see rise in demand for products in market.

IMF has forecasted that India’s GDP will grow at 7.5 percent in FY17. IMF has trimmed down projections for global economy for FY16 due to some loss in growth impetus in advanced economies which will be favouring emerging economies. Stock market globally remains positive on the basis of surge in commodity prices due to bold Chinese fiscal stimulus program, firmness in crude prices and odds of hike in interest rate by U.S. Federal Reserve to stoke inflation. Meanwhile, European stock market was steady after European Central Bank left its key interest rates unchanged which leads to rise in Euro by 0.5 per cent against dollar and stands at 1.1358 dollar for 1 Euro.

On the commodity front, fluctuations have been experienced by commodity prices and almost all of them have closed up. In base metal counter, Aluminium and Zinc may continue to head higher while other base metals may trade in a range. In the next series of days, the bullion counter is expected to get influenced by FOMC meeting, ECB concerns, improved data from China, and fall in dollar, which seem to have lifted the sentiments of commodities.

Going forward markets will take their cues from macroeconomic data, next batch Q4 results of India Inc., policy decisions by the US, Federal Reserve and Bank of Japan, trends in global markets, investment by foreign portfolio investors, domestic institutional investors, rupee against dollar and crude oil price movement, factors which in unison will dictate the market trend that would navigate between mixed to stable.