F&O expiry, US GDP data to guide Dalal Street

This week investors are likely to focus on US GDP data for Q1 along with consumer confidence (June) and new home sales data for the month of May. On the domestic front, the monthly F&O expiry, monsoon progress and action in the IPO market would be key factors to watch out for.

Nifty is facing resistance near its lifetime high. While the market is likely to consolidate in the near term, investors should use the corrections as buying opportunities. We expect further momentum in Nifty, once it manages to cross this physiological mark and make new highs.

Last week, Nifty made several attempts to touch its previous lifetime high but remained just whiskers away due to profit booking and weak global cues. It ended the week with a loss of 161 points (-0.9 per cent) at 18,666 levels before touching a high of 18,886.60 – just 1 point away from its record high of 18,887.60. However, the BSE Sensex managed to hit a fresh all-time high of 63,602; surpassing the high of 63,583 achieved in December 2022. Hawkish statements by the US Fed Chairman in his two day testimony and higher-than-expected rate hike by BoE have made investors worry over global macros. On the domestic front, poor monsoon (31 per cent below normal) so far, has further impacted sentiments.

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Even broader markets witnessed profit booking last week with Nifty midcap and Nifty smallcap down 1 per cent each after a strong run-up in the last three months. Except for Financials, all other sectors ended in red. FMCG, Realty and Metals were the major losers – down 2-3 per cent.

IT stocks came under pressure on the last day of the week post weak commentary by global IT giant Accenture. We expect this weakness to continue in the near-term. Metals saw selling last week as global prices weakened due to weak global housing and infrastructure demand. While we believe a majority of the downside has been factored in with no major price correction likely in the near term, the near-term outlook remains volatile and highly monitorable with multiple mixed signals in the domestic and international markets.

Financials on the other hand, saw momentum as there was huge buying interest in NBFCs post RBI rate pause and a healthy business outlook by many. However, they saw some profit booking coming in towards the end of the week. Even insurance companies were in flavour post strong growth was seen in monthly numbers.

PM Modi’s four-day visit to the US concluded last week where he met the top CEOs and signed several deals apart from strengthening India’s overall relationship with the US.

Primary market too is getting back in action with two mid-sized IPOs opening for subscription this week – Ideaforge Ltd & Cyient DLM Ltd.

The overall structure of the market remains intact, though we are witnessing some consolidation as of now. With healthy macros, range-bound oil prices, a robust fiscal balance sheet and moderating inflation, the backdrop for the market is quite optimistic. Consistent foreign inflows are further strengthening investor confidence.

(The writer heads retail research at Motilal Oswal Financial Services Limited)