Beyond elections, track these 6 factors also to understand Nifty movement this week
Investors would react to not just the exit poll predictions but also India's Q4 GDP numbers which, at 7.8%, was much higher than the Street estimates. Global markets will likely react to the outcome of the PCE data in the US, the Fed's preferred gauge of inflation.
While the single biggest trigger for the , undoubtedly, this week would be the outcome of the on June 4, would be eyeing other key triggers too after last week's .A typical election week is full of heightened volatility and wild swings. "The Indian market is currently trading at a premium, having largely discounted the growing likelihood of the continuation of the Modi era. Consequently, we cannot rule out the possibility of profit booking in the second half of the trading session following an initial upward movement," said Arvinder Singh Nanda of .
Here are key factors for investors to track this week:
1) Election outcome
have predicted that Prime Minister Narendra Modi-led NDA alliance is coming to power for the third consecutive time with a comfortable majority of over 350 seats. While this falls short of the ambitious target of 400+, the market may still rally as the Street has already taken that into account.
If the ruling coalition can cross the 350 mark again, it would be taken quite positively by the market, says Gaurav Dua of .
2) Announcements by winning party
Once the results are out on June 4, investors would be looking for cues made by the winning political party or members of the alliance as to what would be the immediate priority of the new government. Besides policy-related announcements, the Street also wants to know who would be the new finance minister.
3)
RBI's Monetary Policy Committee (MPC) will meet over June 5-7 to review the policy repo rate as well as communicate the policy stance.
As global markets now anticipate the Fed to be on a longer than anticipated hold as compared to March, the RBI is unlikely to make changes to policy rate as well as stance, says Vikrant Mehta of .
4)
FIIs were seen offloading worth nearly Rs 25,600 crore last month. Foreigners have also dramatically increased their net shorts positions in index futures from 5,000 contracts on May 29 to 3.18 lakh on May 31. Any short covering by FIIs may trigger a bigger rally in the market on Monday and Tuesday.
5)
On Monday, investors would react to not just the exit poll predictions but also India's Q4 GDP growth numbers which, at 7.8%, was much higher than the Street estimates. Economic data such as India services and manufacturing PMI will also be released this week.
Globally, the market will likely react to the outcome of the PCE data in the US, the Fed's preferred gauge of inflation.
6)
Auto stocks would be on the radar this week as monthly sales data shows a slowdown amid heat waves, and elections as well as a high base effect in May. In May, ’s domestic sales increased marginally to 144,002 units from 143,708 units a year ago. Sales at saw a 2% expansion in sales to 46,697 units. Mahindra and Mahindra bucked the trend and saw a 31% jump.
7) Technical factors
During the week, slipped below the crucial support zone of its short-term moving average (20-DEMA) and finally settled at 22,530.70.
"We are now trading at the lower band of a rising channel around the 22,400 level, and a decisive break here could lead to a further decline, possibly retesting the 21,800-22,000 support zone. In case of a recovery, the 22,900-23,400 zone would be challenging to surpass," said Ajit Mishra of Religare Broking.
Also read | What are Modi stocks and should you buy them before election results? Here's the full list
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Stocks-Markets-Economic Times
