Holiday Tagged Stock Market Week Expected to Get Effected with Macro Economic Data & Global Trends

RBI’s interest rate decision, key macroeconomic data points, and global trends would drive the market in a holiday-shortened week ahead, say analysts. Markets would remain closed on Wednesday for Id-Ul-Fitr. Meanwhile, official data released after market hours of Friday showed that India’s economic growth rate slowed to a five-year low of 5.8 percent in January-March 2018-19 due to the poor performance of agriculture and manufacturing sectors.

The eight core sector industries too witnessed a slowdown in April, with growth rate slipping to 2.6 percent. There was, however, some relief on the government finances front, as the fiscal deficit for 2018-19 remained within the revised Budget target of 3.4 percent of the GDP.

Markets may react to these numbers Monday, but slowing GDP growth has increased the chances of a rate cut by the RBI on June 6, which will be welcomed by participants, analysts said. “On the global front, US-China trade wars along with a rise in oil price will determine the further trend. We continue to remain optimistic on equity markets,” said Hemang Jani, Head – Advisory, Sharekhan by BNP Paribas.

Post the announcement of key portfolios in the newly-elected government, the focus will shift towards various economic reforms and policies, experts added. Finance Ministry is now lead by Nirmala Sitharaman and there are many hopes now. First is liquidity, followed by banks recapitalization and improvement in demand in the economy.

This week are crucial for a mid-term direction of the market. PMI data for the manufacturing and services sectors as well as auto sales numbers for the month of May are scheduled to be released this week.

“The ambiguity of portfolio allocation is now removed, so this is good for the market in a sense. The emergence of clarity is what was important, and now narrative in markets will be about the economic policies that will be adopted to revive and stimulate the slowing economy,” said Jagannadham Thunuguntla, Sr VP and Head of Research (Wealth), Centrum Broking Limited.

In a highly volatile session on Friday, the benchmark BSE Sensex ended 118 points lower at 39,714.20. However, on a weekly basis, the 30-share index finished with a gain of 279.4 points.