Nervous over the UP election outcome, fears of rate hike by US Fed, profit booking at higher levels and shift of funds to IPO market during the week ended meant the markets logged first weekly fall in 6 weeks.
Benchmark indices, the Sensex and the Nifty fell modestly by 61 points and 42 points closing at 28832 and 8897 respectively.
FII purchases helped the markets recover from weekly lows. Outcome of the GST meeting will indicate the timeline of rollout of the new tax regime. Broad based participation of different sectors in the last few weeks suggests lifetime highs for the benchmark indices in next few weeks.
Probability of an El Nino formation in 2017 has led to some worries about monsoon season, but exact impact on rains and crop production will not be solely dependent on this event say weather forecasters.
Near term direction will be dictated by the upcoming macro economic data, results of assembly elections, trends in global markets, the movement of rupee against the dollar and crude oil price movement. Trends in “satta bazaar” indicate BJP win in UP elections.
With irrational exuberance spreading in the US markets, observers expect US Fed to hike interest rates much faster and more number of times in next few months. It is pertinent to understand rising rates also have a major impact on the global economy.
For the week ahead, chartists predict trading range of 28300-29250 and 8775-9050 for the benchmark indices. Support for the indices evident at 28500 & 28250 and 8825 & 8775.
