US Fed, macro data to guide markets

Buoyed by RBI’s neutral stance, stable crude prices, timely monsoon and global cues, the markets ended with modest gains during the week ended. The Sensex closed at 35,444, up by 216 points or 0.61 per cent, while the Nifty closed at 10,768, higher by 71 points or 0.67 per cent.

Broader markets continued to under perform as markets turned hesitant. The mid- and small-cap stocks that were already under pressure saw further weakness after Sebi placed some firms under additional surveillance to check abnormal rise in stock prices that does not commensurate with the financial health of the companies.

After all six members of the MPC voted in favor of a policy rate hike, the RBI increased its repo rates by 25 bps.

Rising crude prices, significant upsides in inflation expectations, HRA increases by state governments, revised guidelines for arriving at MSP for kharif crops and plausible deficiency of monsoons, could impart upside risks in inflation.

US President is scheduled to meet with North Korean leader Kim Jong Un on Tuesday. Outcome would have modest bearing on global markets, say observers.

Amidst trade war initiated by US, global investors would be closely watching developments in the G7 summit, for more signs on the trade tension.

Near term trend will be dictated by US Fed meeting, progress of monsoon, domestic macro data, FII and DII activity, the movement of rupee, crude price and global cues.

For the week ahead, chartists predict trading range of 34,900-35,950 and 10,575-10,950 for the indices.