Market Outlook: Macro data, global cues to chart equity markets' course

Mumbai: Key macro-economic data points coupled with ongoing fourth quarter results and global cues are expected to affect the course of Indian equity markets during the upcoming trade week, analysts said.

"In the near-term, investors will follow global markets` sentiment and quarterly results," said Dhruv Desai, Director and Chief Operating Officer of Tradebulls Securities.

"Price movement of the Indian rupee against the US dollar will be another crucial factor for the equity markets next week."

In the coming week, companies like Hero MotoCorp, Airtel, Asian Paints, ABB India, Infratel, HCL Technologies and Dr Reddy`s Labs are expected to announce their quarterly results.

Apart from earnings` results, investors will be looking forward to the upcoming macro-economic data points such as the full financial year deficit numbers, monthly industrial output and inflation figures.

Starting from Monday, the Controller General of Accounts (CGA) will disclose India`s fiscal deficit for the April-March 2016-17 financial year.

The deficit figures will be followed by the release during the week of macro-economic data points -- the Index of Industrial Production (IIP) and Consumer Price Index (CPI).

Besides, global political and economic indicators like the results of the French presidential elections and cues on the next US interest rate hike will influence investors` sentiments.

"US Fed speeches should be in focus especially with FOMC (Federal Open Market Committee) expected to move rates in June, after maintaining status quo in the recent meeting," Anand James, Chief Market Strategist at Geojit Financial Services, told IANS.

A hike in the US interest rates can potentially drive away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

In addition, the Bank of England`s (BoE) monetary policy decision will be announced on Thursday.

"French electoral outcome and healthy US jobs report should lend positivity early in the week, but inflation and industrial production should weigh on sentiments in the second half," James explained.

According to Desai, investments by foreign and domestic market participants will also dictate the near-term trends of the domestic indices.

In terms of investments, last week the National Securities Depository (NSDL) revealed that foreign portfolio investors off-loaded equities worth Rs 1,680.40 crore, or $261.70 million, during May 2-5.

Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold stocks worth Rs 2,094.66 crore, while domestic institutional investors (DIIs) bought scrips worth Rs 1,877.96 crore during the week ended May 5.

Currency-wise, the Indian rupee weakened against the US dollar by 13 paise on last Friday to 64.37-38 from 64.24-25 against a greenback.

On technical levels, Deepak Jasani, Head - Retail Research with HDFC Securities, observed that the underlying short-term trend of Nifty indicated mild weakness.

"One may expect further weakness early next week," Jasani forecast.

"The immediate supports to be watched is around 9,270-60 point-level, which is make-or-break level for bulls. Nifty, as per weekly charts, does not seem so bearish till 9,075-point level is breached."

Last week witnessed an initial euphoria post-banking reforms announced by the government but the Indian equity markets ended the week on a flat-to-negative note as investors booked profits.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) scaled a new closing high of 9,359.90 points on May 4 and an intra-day high of 9,374.55 on May 5.

On Friday, however, the barometer 30-scrip Sensitive Index (Sensex) of the BSE fell by around 60 points or 0.20 percent to 29,858.80 points, while the NSE Nifty inched down by 18.75 points or 0.20 percent to close at 9,285.30 points.

"VIX (volatility index) rising over 10 percent last week, after four consecutive weeks of decline, is sign of vulnerability but buzz around banking regulation act and NPAs (non-performing assets) resolution should hold the markets in good stead," James added.