The benchmark share indices lost steam after three successive weeks of gains, as a sharp rout in Chinese stock markets and continued concerns about Greece’s debt crisis exerted pressure on the markets.
The BSE benchmark Sensex slipped below its crucial 28,000-mark, while the CNX Nifty declined below its technical level of 8,400. The 30-share Sensex settled at 27,661.40, shedding 431.39 points or 1.54 per cent, while the 50-share Nifty settled at 8,360.55, dropping 124.35 points or 1.47 per cent. The broader markets, however, flexed some muscles; the BSE Midcap ended 0.45 points up to settle at 10,870.45 and the BSE Smallcap index rose 32.36 points or 0.29 per cent to end the week at 11,335.94.
Key events
On the global front, the Greek saga dragged on. In the emergency Euro zone meet held on July 7, the European Union asked Athens to present a set of new reforms on Sunday that will be acceptable to its creditors or else face the repercussion of an exit from the Euro zone.
The Chinese stock market nosedived 6.2 per cent on Wednesday in spite of the support measures provided by Beijing. This stock market crash had a domino effect on other Asian markets. However, the Chinese equities rebounded later in the week.
On the home front, the first quarter earnings season of corporate India for FY16 started on Thursday with Tata Consultancy Services (TCS) announcing its Q1 numbers.
“Equity markets would have high hopes from the monsoon session of Parliament, slated to begin in later part of July. GST and land acquisition Bill are among the key Bills, which the government would be keen to get passed. There has already been a delay in these, and ability of the government to get them cleared would be crucial,” said Atul Kumar, head of equity funds at Quantum AMC Jayant Manglik, president, Retail Distribution, Religare Securities, said, “Nifty has been trading roughly within 8,000-8,500 band for nearly three months and it failed to sustain above the upper band of the same in its recent attempt. We believe markets will soon find the needed trigger from the domestic front and clarity in world markets would help to further accelerate the momentum. Keep a close eye on prevailing earning season, monsoon and upcoming macroeconomic data.”
Sectorally, the BSE IT and Metal indices plunged four per cent followed by the auto sector, shedding three per cent. Oil and gas, consumer durables and FMCG sectors dropped 1-2.5 per cent each, while capital goods and health care sectors rose two-three per cent each.
Week Ahead
The first quarter corporate earnings season will dictate sentiment on the bourses in the forthcoming week. Among individual stocks, IndusInd Bank is scheduled to announce Q1 results on Monday. Zee Entertainment has its results scheduled for Wednesday, while MindTree is set for Thursday and CRISIL will unveil its quarterly results on Friday.
The IIP data for the month of May will also impact trading next week, especially Monday. Manufacturing has slowed down to 2.2 per cent in May.
The government is set to unveil the Consumer Price Index (CPI) data for the month of June on Monday. The progress in monsoon will also be closely watched.
On the global front, the EU's decision at its Sunday meet on Greece’s fresh proposal will let investors know whether a Grexit is a likely scenario. The volatility in Chinese stock markets will also be closely watched by the markets.