Fate of GST Bill to guide markets

Unnerved by weak rupee, renewed FII selling, Chennai rains and concerns over US interest rate hike; markets remained largely weak with downward bias during the week ended.

The benchmark indices — Sensex and Nifty — closed sharply lower by 490 points and 161 points at 25,638 and 7,782. Obsessed by GST Bill and global cues, markets are ignoring positive steps taken by the government for ease of doing business and impetus given to sectors like defence and others and tangible gains from falling crude prices and commodity prices.

After pricing in RBI policy and GDP data, all eyes are on developments in parliament. Friday’s US jobs report has ended all lingering concerns of a serious slowdown in the United States and it is widely expected that US Fed would raise interest rates later this month. Once the Fed gets the first rate hike out of the way, the market is likely to start obsessing about how high rates will go. After the ECB action to spur economic growth by keeping interest rates low last week, it would be interesting to observe that after Fed rate hike, the United States and Europe would be on very different economic paths.

Near term direction of the market will be dictated by IIP data, GST Bill, rupee-dollar movement and global cues. For the week ahead, chartists predict trading range of 25,150-26,100 and 7,600-7,945. Immediate supports for the indices are at 25,400 and 25,150 and 7,710 and 7,630. If fears like GST Bill not getting passed and weakness in rupee after US Fed rate hike come true, punters expect Nifty to fall to as low as 7,400 level in next few weeks.