News

Published: June 10, 2024
Updated: June 10, 2024

Dalal Street Outlook: Key Factors Shaping the Market This Week (10-14 June)

Calmer Waters Expected as New Government Takes Charge

With the Bharatiya Janata Party-led National Democratic Alliance (NDA) expected to form the government on June 9, market participants anticipate more stability after last week's volatility. Following a turbulent period, markets are expected to start on an upbeat note due to the clarity on policy continuity.

Key Economic Indicators

1. CPI Inflation:

The inflation figures for May will be released on June 12. Economists forecast a slight decrease to 4.8% from April’s 4.83%, driven by lower fuel and energy prices, although food inflation remains a concern. The wholesale price index (WPI) for May will follow on June 14, with expectations of an increase to 4% from April’s 1.26%, largely due to rising fuel prices.

2. IIP Data:

The Index of Industrial Production (IIP) for May, expected on June 12, is anticipated to slow to 3.9% from April’s 4.9%. The manufacturing sector, constituting 78% of the index, is also predicted to see reduced growth.

3. Sector-Specific Insights:

Passenger Vehicle Sales: May’s passenger vehicle sales data, set for release on June 13, will be closely monitored. In April, growth slowed significantly to 1.2% year-on-year from 8.9% in March, reflecting post-pandemic demand fluctuations.

4. Global Economic Data:

FOMC Meeting:
The Federal Open Market Committee (FOMC) meets on June 11-12, with the policy stance announcement on June 13. Markets expect the US Fed to maintain rates at 5.25-5.50%, with debates on potential rate cuts in September or December 2024.

International Releases:
On June 10, Japan will release economic growth figures and the Eco Watchers Survey. The UK’s jobs report, industrial production, and GDP growth data will be out on June 11-12, while China’s inflation data on June 12 is expected to show a slight decline.

5. Market Dynamics

FII Flows:
Foreign institutional investors (FIIs) were net sellers last week, offloading over ₹16,971 crore in equities but buying ₹4,669 crore in debt. Domestic institutional investors (DIIs) were net buyers, investing over ₹5,578 crore in equities. FII behavior will be closely watched following the election results.

IPO Activity:
Two mainboard IPOs are in focus: Le Travenues Technology (June 10-12) and Kronox Lab Sciences (listing on June 10). Additionally, several SME IPOs, including 3C IT Solutions, Magenta Life Care, and Sattrix Information Security, are set to list on June 12.

6. Technical and Market Analysis

Technical View:
After a volatile week with a 2,000+ point range, the Nifty gained 3%. Traders are advised to avoid over-leveraged positions due to a Hanging Man-like candlestick pattern and negative divergence in the daily RSI.

F&O Cues:
Nifty’s key resistance is at 23,700, with support at 22,500. The immediate range is between these levels, with significant call and put open interests indicating these resistance and support points.

7. Market Volatility

India VIX:
The market volatility index, India VIX, has dropped significantly by nearly 43% to 16.88 from around 24, indicating a more stable market environment conducive for the bulls to increase their positions.

As the new government takes charge, the markets are poised for a period of relative stability. Key economic indicators, global data releases, and sector-specific developments will be closely watched. Investors are advised to approach with caution, given the technical indicators and ongoing volatility in various market segments.