What to watch next week: F&O expiry, oil price, G20 among 8 factors that would steer market

NEW DELHI: Domestic equity benchmark Sensex slipped for the third consecutive time during the week gone by, as the market remained volatile amid negative domestic as well as global cues.

Lingering liquidity crisis at home, global trade tussle and geopolitical tension in West Asia turned investors risk averse while sluggish progress of monsoon also added to the gloom.

For the week, Nifty slipped 0.84 per cent while Sensex retreated 0.65 per cent.

The coming week may see more volatility due to the expiry of June series futures & options contracts. Global sentiment will remain a major influencing factor while investors will also start building up for the Union Budget.

“Next week, market will start speculating on the outcome of the Budget, which is usually magnified by media, but stocks may not really swing in the same manner. International factors may affect domestic markets and any confrontational stance in West Asia would prove a dampener for equity markets,” said Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote.

Having said that, let’s take a look at the key factors that may steer Dalal Street during the week ahead:

F&O contracts expire on Thursday
The market may experience bouts of volatility as June series futures & options contracts will expire on Thursday and participants will roll over positions to the July series.

Progress of monsoon
The seasonal rains are advancing at a sluggish pace. As per India Meteorological Department (IMD), 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. IMD said the conditions are becoming favourable for further advance of the monsoon. The market will closely watch rainfall patterns in the coming days.

Fiscal deficit, infra output data
May fiscal deficit numbers and infrastructure output data will be released on Friday. Both are significant macroeconomic prints that can give an idea about the country’s economic health.

G20 meeting
This event will be in focus in the light of deteriorating global economic health amid the escalating trade war. Hopes that the world may see an ebb in US-China trade tussle are higher after the US President said he would have an extended meeting with his Chinese counterpart at this event.

Global macros
The first quarter GDP prints of the US, Bank of Japan’s core CPI, May new home sales numbers and goods trade balance of the US and Japan’s industrial production data (May) are among the key global macro numbers scheduled to be released during the week. Besides, markets will also read minutes of Bank of Japan’s monetary policy meeting on Tuesday.

Flow of foreign money
Flow of foreign portfolio investments will remain an important factor for the market. Foreign portfolio investors (FPIs) remained net sellers in the market last Friday, pulling out Rs 730.58 crore, NSE data showed. However, so far in June, FPIs have pumped in Rs 10,844 crore into the Indian equity and debt markets, data available with NSDL showed.

Crude oil price & rupee
Crude oil has started surging amid growing tension in West Asia. As per Reuters, oil futures rose about 1 per cent on Friday, with the US crude up 10 per cent and global benchmark Brent gaining 5 per cent for the week, on fears that the US could attack Iran and disrupt oil flows from a region that supplies more than one-fifth of global output. Elevated crude oil prices are a bad omen for the Indian economy as they directly impact the country’s fiscal maths and currency.

Technical view
Nifty formed a ‘Bearish Belt Hold’ candle on the daily chart on Friday. Analysts say, in order to move up, the index has to stay above 11,687 on a closing basis. Its key support is around 11,640, while it could face resistance around 11,800, said Arun Kumar of Reliance Securities. Aditya Agarwala of YES Securities said a sustained trade below 11,725 can drag the index lower towards 11,610 level. On the flip side, a move above 11,750 will take it to the upper end of the range at 11,860.

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