Inflation numbers, IPO season among key factors that may guide market this week – Economic Times

New Delhi: The domestic equity market witnessed a historic week as bulls dragged benchmark indices to new record highs. Both BSE Sensex and NSE Nifty50 scaled new lifetimes levels as banking and financial counters contributed significantly.

The immediate resistance levels for Nifty50 are 15,850 and 16,000 while key support levels for the index are 15,500 and 15,300, said Mohit Nigam, Head- PMS, Hem Securities.

The tone of the market was upbeat following favourable local cues and optimism in global markets. Declining Covid cases, easing restrictions, strength in corporate results and a positive note by the Department of Economic Affairs on the impact of second wave of Covid boosted sentiments on Dalal Street last week.

On the global front, the market was awaiting key events including European Central Bank’s (ECB) policy meeting, which has raised its growth forecast while pledging liquidity support. US inflation numbers eased worries as the current surge is transitory and insufficient for the Fed to taper its bond-buying policy.

“In the coming week, India’s inflation data for May, which is expected to be elevated, will be the key economic driver in the domestic market. On the global front, the Fed’s monetary policy meeting will be in focus as the market awaits its stance on continuing stimulus measures,” said Vinod Nair, Head of Research at Geojit Financial Services.

Here are key factors that may steer the market this week:

Inflation numbers
India will release its data for wholesale price index (WPI) and consumer price index (CPI) for May this week. Inflation numbers are likely to increase as fuel prices have spiked.

In April, WPI numbers shot to a 11-year high of 10.05 per cent, whereas India’s retail inflation likely rebounded to 5.30 per cent in May. RBI has projected retail inflation at 5.1 per cent in 2021-22.

US FOMC meet
The Federal Open Market Committee’s (FOMC) two-day meeting is a big event for markets in the week ahead. Although the Fed is not expected to take any action, tweaks in interest rate forecasts are likely. The Fed is expected to signal a taper well before it takes any action. The results of the meeting are expected on Wednesday.

The Federal Reserve will also release its industrial production index data and retail sales for May on Tuesday.

Four IPOs in a week
After a two-month pause, India’s primary market is getting ready for action as four companies- Sona Comstar, Shyam Metalics, Dodla Dairy and KIMS Hospitals- have lined up initial public offerings in the coming week, looking to raise a total of ₹9,132 crore from share sales.

“The IPO market is getting ready for 6 new IPOs in a couple of months. We expect this will be a very good opportunity for retail investors to make money due to listing gains in a very short period,” said Yash Gupta, Equity Research Associate, Angel Broking.

Several states are poised to lift more restrictions and ease down curbs in the next phase of unlocking. Major states like Maharashtra and Delhi may have more relaxations on cards, while Karnataka will unlock in phases from June 14.

Covid Cases
India’s tally of daily Covid-19 cases has witnessed a steep fall in the last couple of weeks, with infections falling below one lakh-mark a day. It is a big relief for authorities and Dalal Street traders. As cases decline, hopes of economic recovery are likely to increase.

India reported 80,834 new Covid-19 cases, with 1,32,062 discharges in the last 24 hours, as per the Union Health Ministry. The toll due to the disease rose to 3,70,384 with 3,303 fresh fatalities.

Technical Outlook
Nifty has rallied more than 10 per cent from the recent low. Hence, a mild pullback cannot be ruled out given that the market is rallying on a slowed-down momentum, which can be properly visualized with the help of negative divergence in RSI on the daily timeframe. As long as the benchmark index is trading above 15,400, we suggest traders to maintain a bullish bias on the market,” said Nirali Shah, Head of Equity Research, Samco Securities.

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