Dalal Street in the Week Ahead (17-21 June 2024)!

Ira Singh
Khabar Khabaron Ki,17 June’2024

The Indian stock market is expected to continue its bull-run this week, buoyed by a slew of positive macroeconomic trends and robust investor confidence. Analysts anticipate that the recent upward momentum in the markets will persist, supported by favorable economic indicators and optimistic corporate earnings forecasts.

Domestic markets will remain closed on Monday on account of Bakri Id. Trading on both the NSE and the BSE will resume on Tuesday, June 18.

While global investors will keep an eye on Bank of England and China’s central bank interest rate decisions. PMI data will be released by the United States, India and Europe along with Europe inflation data.

Last week, Nifty touched a new high of 23,490 and closed with gains of 175 points (+0.8%) at 23,466 levels. Broader markets outperformed with Midcap100 and Smallcap100 up 3.8% and 4.8% respectively.Reduced political overhang and cool-off in inflation in both India and US uplifted market sentiments. Positive global cues along with continued domestic buying too helped the markets. Except fast moving consumer goods and IT stocks, all sectors ended in green with realty, automotive, infrastructure, and state-owned banks gaining 3-6%.

Dalal Street Week Ahead Key Headlines to Watch!

• Domestic Economic Data:On the domestic front, the street will focus on HSBC India PMI manufacturing, composite and services data for June which will be out on June 21.
• Central Bank Decisions : Investors will closely monitor interest rate decisions from the Bank of England and China’s central bank. Central banks worldwide are cautious about joining the global interest-rate cutting trend. This week, key decisions from advanced economies, including the UK and Australia, are expected. Despite the Federal Reserve’s recent reduction in US monetary easing projections, these central banks are likely to indicate hesitancy due to ongoing concerns about disinflation. June, originally anticipated as a month of widespread rate cuts, now appears increasingly characterized by caution among policymakers.
• FII flows(Foreign Institutional investors): Foreign investor activity will be closely monitored next week. After being net sellers since the beginning of May, foreign investors briefly turned buyers, purchasing over Rs 10,000 crore in Indian equities over the last five sessions. In May, they sold approximately $3 billion worth of stocks, and in June so far, about $624 million has been sold. However, experts caution that this recent buying spree may not signify a trend reversal, citing concerns over high valuations and the underperformance of large-cap stocks.

During the recent election results, foreign investors held significant short positions, indicating caution in the market. Looking ahead, there may be continued nervousness leading up to the July Budget, especially after the unexpected election outcome. Foreign investors are likely to seek clarity on policy continuity before committing to substantial new investments.
• DII(Domestic institutional investors)flows: Domestic institutional investors (DIIs) maintained strong inflows, purchasing approximately Rs 6,000 crore last week and totaling Rs 2.17 lakh crore so far this year. Experts believe that if the market declines, DIIs and retail investors will adopt a successful buy-on-dips strategy.

Analysts’ Perspectives
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, indicated that the market is expected to remain range bound in the near term due to the lack of big triggers till the budget. Because values are high, particularly in the broader market, any big increase will prompt FIIs to sell. If the market falls, DIIs and individual investors will use a buy-on-dips technique that has proven effective in this market.

While the FOMC’s (the Federal Open Market Committe) hawkish stance has tempered expectations for aggressive rate cuts in the US, the stable inflation environment offers some reassurance. Domestically, the gradual decrease in CPI is encouraging, but the path to the target inflation rate is still fraught with challenges. A normal monsoon could be the game-changer, potentially prompting the MPC to consider easing measures