Market Outlook

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Markets Last Week

Markets started the holiday trimmed week on a positive note. The momentum was triggered by weakness in crude oil prices and hopes of RBI cutting rates in the bi monthly policy. But the momentum was short-lived and markets traded lower after RBI cut repo rates by 25 bps and changed stance to accommodative from neutral that came mostly in expected lines. No further comments by RBI regarding the on-going NBFC funding crisis was taken as a surprise by the market that added to the negativity. Initial momentum witnessed in banks after news that government is planning Rs 40,000cr PSU bank recapitalization was short lived. On the global front expectation of further rate cut in key US and Europe fueled markets, but trade war concerns limited the gains in Asia and European markets.

Markets week ahead

Going ahead market is expected to trade based on key macro data like inflation and Industrial production. Inflation is expected to be slightly on the higher side based on rise in food prices but to remain under the range provided by RBI. Industrial growth (IIP) is expected to show some slight growth. How monsoon pans out will also be in focus as the latest estimates provided by IMD indicate monsoon will arrive late. Market is expected to be volatile and given the limited headroom in valuation, we do not anticipate big growth in main indices. Now markets will turn their focus on to upcoming budget and hopes will start kick in for reforms from the government to accelerate and increase private investment. On the global front the progress regarding US-Mexico-China trade war concerns and movement of crude oil prices ahead of OPEC meeting scheduled end of this month will remain in focus.

Posted: June 10, 2019

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