Stock Market Triggers: US Fed Policy, IIP, CPI Driving Sensex & Nifty

Stock Market Triggers

Date- June 11, 2023

Place- New Delhi, India

Indian indices had a lackluster performance for the second consecutive week, as mixed cues kept the market almost flat. Despite a subdued beginning, buying in select heavyweights attempted to change the tone in the middle.

Closing on Friday, the Sensex settled at 62,625.63, marking a decline of 223 points or 0.35 percent. Similarly, the Nifty ended at 18,563.40, down 71 points or 0.38 percent.

Vinod Nair, Head of Research at Geojit Financial Services, noted that the domestic market started the week positively, buoyed by favorable indicators such as stronger-than-expected PMI figures, sequential growth in auto sales, and robust expansion in bank credit.

“However, market sentiment was dampened as the RBI opted for a cautious approach by refraining from a significant cut in the inflation forecast. The central bank cited concerns over geopolitical uncertainties, the potential impact of El Nino, and the rise in the minimum support price while reaffirming their commitment to bringing down inflation to near the targeted 4%,” he said.

Consequently, both the benchmark indices, Nifty and Sensex, closed almost unchanged at 18,563.40 and 62,625.63 levels, respectively.

Ajit Mishra, SVP – Technical Research at Religare Broking Ltd, observed, “The key sectoral indices witnessed a mixed trend wherein auto, energy, and realty posted decent gains, while IT and FMCG ended lower. Amid all this, the broader indices managed to outperform for yet another week, gaining in the range of 0.5%-1.2%.”

Looking ahead to the coming week of June 12-16, investors can expect several significant events that will influence the market. One of the most eagerly anticipated events is the US Federal Reserve’s policy outcome, scheduled for June 14. Furthermore, the European Central Bank (ECB) and Bank of Japan will also announce their policy decisions in the following sessions. On the macroeconomic front, participants will closely track IIP data, CPI Inflation, and WPI Inflation throughout the week. Additionally, updates on the progress of the monsoon will remain on their radar.

In light of these factors, market analysts recommend maintaining a positive stance as long as the Nifty holds at 18,400. They suggest focusing on sectors that show relatively higher strength, such as auto, FMCG, and realty, and selectively considering others. In the event of a decline, the 18,100-18,200 zone is expected to provide the necessary cushion. Ajit Mishra from Religare Broking Ltd expressed confidence that the prevailing outperformance may continue in the broader indices, advising investors to continue adding quality stocks from the midcap and smallcap space.

Market participants are eagerly awaiting the release of domestic inflation data for May, which is anticipated to show a cooling down from the current level of 4.7%.

“Global cues will also play a significant role in shaping the market trend, with investors closely monitoring the outcomes of the FOMC meeting and the US inflation print. Indian settled almost flat for the second consecutive week amid mixed cues. The beginning was subdued, but buying in select heavyweights in the middle tried to change the tone,” said Vinod Nair, Head of Research at Geojit Financial Services.

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