The stock market may witness continued buying, but the overall mood will remain cautious as the government may decide on raising fuel prices this week, say experts.
“We expect continued buying in the market after the end of the fourth quarter results. The most positive factor is the progress of monsoon is on schedule. However, given that confidence levels are still low, a keenly awaited event will be the government meeting on June 9 for changes in oil and gas prices,” said Motilal Oswal Securities’ senior analyst Parag Doctor.
Analysts said the government decision on raising fuel prices could act as a hindrance to market movement. Further, a host of other factors can influence the sentiment in the near future.
“The RBI mid-quarter review on June 16, the EGoM on fuel prices on June 9, the April IIP data and the May inflation figures would be the key events that could have a bearing on the direction of the markets in the coming days,” said IIFL’s head of research (India private clients) Amar Ambani.
10-yr bond yield set to stabilise
The yield on the 10-year benchmark government bond 7.80 per cent is likely to stabilise after falling 19 basis points last week. The bond closed at 8.27 per cent on Friday. The weekly fall was the biggest since May 2010.
This week, the yields may trade in the range of 8.25-8.30 per cent as market participants hope the government will adhere to the borrowing plan in the current financial year. The government has pegged gross borrowing at Rs 4.17 lakh crore in the current financial year. So far, it has borrowed Rs 72,000 crore.
But, further supply dated government securities this week may limit a further drop in yields. According to the borrowing calendar, the RBI may auction Rs 12,000 crore of government bonds this week.