GST preparedness to dictate markets

Unnerved by the hike in interest rates by US Fed, fears over preparedness of the new GST tax system and concerns over NPAs have triggered profit booking during the week ended.

Benchmark indices the Sensex and the Nifty closed 206 points and 80 points lower at 31,056 and 9,588 respectively.

It is pertinent to observe that over the last one year, DIs have bought over `70,000 crore of equities, while FIIs have purchased around `60,000 crore of shares. Observers feel that the market is richly valued at present and will need a firm trigger to surpass its recent record high.

Possibility of directionless and range bound trade for some weeks is not ruled out. Market players are eyeing GST implementation (expected to effective from July 1) and monsoon progress. June quarter earnings which will begin next month.

Changes initiated by Sebi in client margin funding to be implemented from July 1st will also have an impact on trading volumes, indicate broking houses.

Finance ministry’s push for resolution of NPAs of banks and announcement of policy moves for merger of PSU banks may give fillip to markets.

Near term trend will be dictated by the rollout of GST without hiccups, progress of monsoon, strategic resolution of NPAs of banks, the dollarrupee exchange rate, investment pattern of FIIs and international crude oil prices.

For the week ahead, chartists predict trading range of 30,600-31,500 and 9,400-9,750 for the indices.

Key supports for the indices are at 30,800 & 30,550 and 9,515 & 9,440.

Overall trend indicates consolidation in near term.