Monsoon, macro data to set market tone

Despite developments on the trade war between the US and China and fears over outcome of the Opec meeting, the markets ended on flat note due to a rally in the later part of the week.

Indian equities were the only ones in Asia adding value in the two weeks through June 21. The Sensex closed at 35,690 up by 67 points and the Nifty closed at 10,822, higher by just 4 points. Weak market breadth reflects the undercurrent nervousness over the market direction in near term horizon. The mid- and small-cap stocks that were already under pressure saw further weakness.

The FIIs remained sellers in the cash segment but were seen hedging their positions by remaining buyers in the derivatives segment. DIIs, however, were seen supporting the markets at the lower levels. Monsoon rainfall was 9 per cent lower than normal so far in June, but in some states such as Gujarat the deficit was as high as 93 per cent. However, according to reports, monsoon expected to revive strongly from Sunday.

Following calls from consumers to curb rising fuel cost, weekend announcement of Opec to boost supply may provide some comfort. The tariff threat on European cars escalates global trade war.

Track developments on the escalating trade war rhetoric wherein no one is ready to blink first.

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

For the week ahead, chartists predict trading range of 35,150-36,250 and 10,650-10,975 for the indices.