Markets moved in a directionless and range bound manner during the week ended on the back of a weak spread of monsoon, high CPI data, speculation over extension of term to RBI governor Raghuram Rajan, US Fed decision to not hike interest rates and fears over the outcome of Brexit referendum.
Amidst high intraweek volatility, the Sensex and the Nifty — closed on a flat note at 26,626 and 8,170. Stock specific speculative activity was seen mid and small cap stocks. A recent meeting of state FMs over GST has raised hopes of passage of the legislation in the next parliament session.
Fears over the outcome of the Brexit referendum have rattled currency markets recently after a wave of polls suggested the UK could vote to leave. Track carefully developments in Eurozone. Near term direction of the markets will be dictated by spread of monsoon, the reaction of global markets to outcome of Brexit referendum, the dollar-rupee exchange rate, investment pattern of FIIs and international crude oil prices.
Weekend reports of Raghuram Rajan not opting for second term as RBI governor may trigger a knee-jerk reaction in markets. Eminent economists and former policymakers say Rexit a ‘bad omen’ for the Indian economy and will be seen by the world as India’s non-approval to a policy against inflation and bad loans.
For the week ahead, chartists predict a trading range of 26,000-27,300 and 7,950-8,325 for the indices. Key supports for the indic-es are at 26,300 and 26,000 and 8,075 and 7,985. Fear and volatility are making a return to markets. In the event of a sharp downtrend over Brexit, look for stocks with strong fundamentals, which are selling at a bargain price.
