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Indian markets saw marginal gains in the previous week, influenced by the Reserve Bank of India's decision to maintain the policy repo rate at 6.50%. As the new week begins, market participants are eagerly awaiting key data releases, including the Index of Industrial Production (IIP), Consumer Price Index (CPI), and Wholesale Price Index (WPI). Additionally, global cues, such as the FOMC meeting and US inflation data, will also impact market trends. Foreign investment trends and the outlook for the coming week will further shape market sentiment.
Domestic Data Releases:
On June 12, the IIP data for May and CPI data will be released. India's annual inflation rate slowed sharply to 4.7% in April 2023, the lowest since October 2021. The upcoming CPI data is anticipated to show a further cooling down from the current level of 4.7%. On June 14, the WPI data will be released, reflecting wholesale manufacturing prices, which decreased by 2.42% year-on-year in April 2023. Imports and exports data are scheduled for June 15, followed by banks' deposit growth data on June 16.
Global Economic Data:
Investors will also monitor economic data from the US, starting with consumer inflation expectations on June 12, followed by CPI, Redbook, and Producer Price Inflation (PPI) on subsequent days. The market will closely observe the Fed Interest Rate Decision, FOMC Economic Projections, Retail Sales, Philadelphia Fed Manufacturing Index, Initial Jobless Claims, and Michigan Consumer Sentiment. These data releases will have an impact on global market sentiment.
Foreign Investment Trends:
In May, foreign portfolio investors (FPIs) showed significant interest in buying stocks in Japan, South Korea, Taiwan, and India, while reducing holdings in China. This trend continued into June, with FPIs investing INR 43,838 crore in India through stock exchanges and the primary market. Financials, autos, auto components, capital goods, and FMCG sectors witnessed FPI buying, while selling was focused on IT and metals. However, valuations have become challenging from a short-term perspective, and FPI inflows may slow down in the coming days.
Outlook for the Coming Week:
Asian stocks rose on Friday due to expectations of a pause in the US Federal Reserve's rate hike cycle, driven by weak US labor data. However, disappointing inflation readings from China limited broader gains. European stocks were cautious ahead of upcoming policy meetings of key central banks. In India, equity mutual fund inflows dipped by 50% in May, but remained positive for the 27th consecutive month. Monthly contributions to Systematic Investment Plans (SIP) increased by 7.44% in May. The Nifty fell for the second consecutive session, forming a bearish pattern on the weekly charts. A close below 18,508 could accelerate the downtrend, while 18,726 may act as resistance on upward moves.
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