Indian benchmark indices, Sensex and Nifty, ended lower last week as volatility persistent in the markets amid negative domestic as well as global cues. Several factors like concern of economic slowdown at home, global trade war, geopolitical tension in West Asia and forecast of a weak monsoon spooked investor sentiment. The BSE benchmark Sensex settled with 0.6 per cent loss as market factored in some rationalisation in GST rates, shortfall in tax collection and RBI indication of losing traction on growth.
The market capitalisation (m-cap) of six of the 10 most valued domestic companies declined by Rs 53,458.80 crore last week, led by Reliance Industries Ltd (RIL). RIL's valuation fell by Rs 23,929.9 crore to Rs 8,10,889.80 crore, followed by Tata Consultancy Services, HDFC Bank, HUL, HDFC and ITC among others.
"Concern over shortfall in tax collection and RBIs indication of losing traction on growth impacted the sentiment, where the government is not likely to stick on fiscal target of 3.4% for FY20. The market seems to factor in some rationalization in GST rates in the upcoming meeting and more fiscal measures in the budget due next month. Delayed monsoon and a surge in oil prices due to US-Iran tensions further led the consolidation," said Vinod Nair, Head of Research, Geojit Financial Services.
Let's take a look five factors that the Dalal Street will be keeping an eye on.
F&O contracts expiry: The market may witness volatility as June series futures and options contracts will expire on Thursday, June 27. Traders will roll over positions in the F&O segment from the near month May 2019 series to June 2019 series.
Progress of monsoon: The traders will keep an eye on the progress of monsoon as further delay may cause jitters in the stock market. According to the India Meteorological Department (IMD), the overall monsoon deficiency in the country has reached 43 per cent due to its sluggish pace. The department has said that southwest monsoon has further advanced into some more parts of Madhya Maharashtra, Marathwada, Vidarbha, remaining parts of Karnataka, Telangana, Odisha, Jharkhand, Gangetic West Bengal and Bihar, most parts of Chhattisgarh and some parts of east Uttar Pradesh on Saturday.
Macro-economic indicators: Ahead of the union budget, all eyes will be on a slew of macro-economic data which will be released later this week. The government will release May fiscal deficit data and infrastructure output numbers on Friday. The numbers would gauge the economic health of Asia's third-largest economy.
Rupee and crude price movement: Investors may react to rupee and crude price movement. The crude surged last week as investors turned jittery amid fear that the US could attack Iran and disrupt oil flows from a region. The rise in oil prices would affect Indian markets and rupee negatively as it would have a direct impact on its fiscal deficit.
Foreign fund inflow: The flow of foreign institutional investor (FII) will also set the direction for the Indian stock market. On Friday, the FIIs stood as net buyer in debt market but turned net buyer in the equity market. The foreign investors pulled out Rs 179.24 crore from the equity market, while infused Rs 679.06 crore in the debt market.