Market Ahead Podcast, June 14: Factors that could guide markets this week

As easing restrictions from states brought back hopes of faster economic recovery, the markets rallied with both Sensex and Nifty hitting their respective all-time highs last week. It was also the fourth consecutive week of gains for the benchmark indices.

Analysts expect the investors to track the reopening of the economy, pace of Covid vaccinations, macro data and US Fed decision this week. While the overall market setup remains positive, some consolidation cannot be ruled out, they say, as benchmark indices have risen nearly 8% in a month and with the last leg of the March 2021 quarter earnings season, the stock specific action could continue. They suggest continuing with the “buy on dips” approach.

First and foremost, participants will first react to the IIP numbers which were announced post-market hours on Friday. That apart, on the macro front, both the CPI and WPI inflation for the month of May will be released on Monday, while the Balance of Trade data for May will be announced on Tuesday. And on Friday, minutes of the recent RBI policy meeting held during June 2-4 will also be out.

Globally, markets will closely watch the outcome of the US Fed meeting on June 16 which analysts feel would keep markets volatile. Although, they expect the prevailing consolidation in the global markets to end if the US Fed reaffirms its dovish stance on interest rates amid the inflation fear.

Meanwhile, on the earnings front, 200 companies are lined up to post their quarterly figures this week, including some prominent ones such as Coal India, LIC Housing Finance, Jubilant Food works, Power Finance Corporation, Power Grid and NTPC.

Investors will continue to track the pace of Covid infections and vaccinations in the country. India's fresh covid cases have been below the 1 lakh mark for the seventh day with the pace of vaccinations on the rise in the country. This will lead to further unlocking by states and aid economic recovery.

The action in the primary market will also be high as four new issues will hit Street this week, namely Shyam Metalics, Sona Comstar, Dodla Dairy and Krishna Institute of Medical Science. The first two IPOs will open for subscription today while the other two on June 16.

Lastly, oil price movement, rupee's trajectory and FII flows will also sway market mood.

And now, let's take a look at the trade setup for today.

Asian stocks were mixed Monday in holiday-thinned trading as investors prepared for a key Federal Reserve meeting later in the week. Shares saw modest gains in Japan and slipped in South Korea. Trading volumes are expected to be light with a number of holidays in the region including in Australia, China and Hong Kong.

Japan’s Topix Index gained 0.1% and South Korea’s Kospi Index fell 0.2%. S&P 500 futures rose 0.1%.

Tracking a mixed trade setup, Indian markets looked set to open lower. SGX Nifty was down 75 points at 15,748 at 7.40 am.

A look at the stock-specific triggers that are likely to guide the market today.

Coal India, Indian Overseas Bank, Kajaria Ceramics, Greenply Industries and Uttam Sugar Mills are among 50 firms slated to release their quarterly numbers today.

Drug firm Lupin on Sunday said it has received a warning letter from the US health regulator for its Somerset facility in the US.

BSE and NSE will suspend trading in the shares of Dewan Housing Finance Corporation Ltd (DHFL) with effect from Monday. The move, aimed at avoiding "market complications", comes against the backdrop of the NCLT approving Piramal Group's resolution plan for the bankrupt-DHFL.

BHEL's consolidated net loss narrowed to Rs 1,036.32 crore in the March 2021 quarter, mainly on the back of higher revenues. The company's consolidated net loss had stood at Rs 1,532.18 crore in the quarter ended on March 31, 2020.