RBI monetary policy, global cues among factors that may drive market this week

On Friday, Sensex closed 119 points, or 0.19 per cent, higher at 62,547.11 while the Nifty ended at 18,534.10, up 46 points, or 0.25 per cent.

Mid and smallcaps outperformed the benchmark indices significantly. The BSE Midcap index hit its all-time high of 27,322.22 in intraday trade before ending 0.60 per cent higher at 27,294.10. The Smallcap index hit its 52-week high of 30,969.95 in intraday trade and closed 0.57 per cent higher at 30,885.70. The all-time high of the smallcap index is 31,304.44 which it hit on January 18, 2022.

The domestic indicators are favorable for bullish sentiment with the release of GDP data, and robust Q4 earnings. The auto sales for May showed a sequential recovery, boosting sentiment across the sector, said Vinod Nair, Head of Research at Geojit Financial services.

“As we enter a new month, investors are anticipating the release of data points such as PMI and US payroll data, in addition to the outcome of the central banks’ monetary policy meeting,” said Vinod Nair, Head of Research at Geojit Financial services.

Ajit Mishra, VP – of Technical Research, at Religare Broking said, “Markets settled almost unchanged in a volatile week, tracking mixed cues. Initially, the tone was positive however uncertainty on the global front trimmed the gains as the week progressed.”

Among the key sectors, energy, banking and IT traded under pressure however buoyancy in auto, FMCG and realty majors capped the damage.

“Finally, the benchmark indices, Nifty and Sensex, closed flat at 18,534.10 and 62,547.10 respectively. Amid all, continued buying on the broader front kept the traders busy as both midcap and smallcap indices gained in the range of 1.6%-3.1%,” he said.

What to expect in the week ahead?

The coming week June 5-9 is going to be an eventful one as we have RBI MPC’s monetary policy meet outcome scheduled on June 8. Before that, on the macroeconomic front, the OPEC+ meeting on June 4 and S&P Global Services PMI on June 5 will also be on participants’ radar for cues.

“Considering the drop in CPI inflation along with the effects on GDP and GST kitty, we anticipate that the Monetary Policy Committee (MPC) will continue to hold the pause button. In its previous policy, the MPC clearly stated that its next move would depend on data, and the latest inflation numbers were within the target range. Furthermore, IMD has indicated a normal monsoon, despite some concerns about El Nino, which will provide support to the RBI. Liquidity above 1.00 lac crores is comfortable as evident from WACR remaining around 6.25%, so no concern arising for the same,” said Mahesh Agarwal , National Head – Wealth, AUM Capital Market.

Another thing to watch out for this week would be the onset of the monsoon. In India, agriculture is heavily dependent on monsoon. 

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“Markets have been outperforming the majority of their global peers in recent weeks however further deterioration of the trend, especially in the US markets, might change the mood. At the same time, the lack of decisiveness in the banking pack around its record high is hurting the sentiment and its performance would play a critical role in the coming week,” said Ajit Mishra, VP – of Technical Research, at Religare Broking.

“Having said that, we reiterate our positive view and suggest focusing on sectors /stocks, which are holding well. On the index front, we expect Nifty to hold the 18,100-18,300 zone in case of any dip while a decisive close above 18,700 would pave the way for a new high,” he added.

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Updated: 04 Jun 2023, 07:53 AM IST

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