Economic numbers, RBI meet among key factors that may guide market this week

“The market has been in a jubilant mood since the start of trade on Friday. It closed well above the resistance of 15,300 and should be headed higher to levels closer to 15,600. As long as 15,000 holds, traders can utilize any dip to accumulate long positions for higher targets,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments, said.

The tone of the market was upbeat following favourable local cues and optimism in global markets. A steady fall in Covid-19 infections, weaker dollar and strength in corporate results boosted the sentiments on Dalal Street last week.

Fed officials reiterated that inflation is transitory, beating down worries. A fall in US jobless claims also helped in raising optimism in the global market as it pushed hopes of economic recovery a notch higher. Stable US bond yields has cushioned emerging markets.

“Expectations of state-wise unlocking due to declining Covid cases are giving hopes of economic recovery. As the result of a decline in second wave infection curve, the plausibility of further re-opening of the economy has enlarged and consequently the market is expected to gain further momentum surpassing previous highs,” said Vinod Nair, Head of Research at Geojit Financial Services.

Here are key factors that may steer the market this week:

India’s economic data: The National Statistical Office will release GDP growth estimates for March 2021 quarter as well as provisional annual estimates for 2020-21 on Monday. The Indian economy is estimated to show growth rather than contraction during January-March (Q4) of FY 2020-21, according to an ET poll.

The infrastructure output and fiscal deficit for April will be announced on Monday. Markit Manufacturing PMI for May will be released on Tuesday, while Markit Services and Composite PMI for May will be declared on Thursday.

RBI policy meet: The Reserve Bank of India (RBI) Governor-led Shaktikanta Das Monetary Policy Committee will meet between 2-4 June. It will be the first bi-monthly monetary policy review for the fiscal 2021-22.

MPC is expected to maintain an accommodative stance, keep all rates on hold to control the impact of Covid-19 pandemic and localised lockdowns. The central bank would keep a close watch on inflation amid rising fuel prices.

Covid-19 cases: India’s tally of daily Covid-19 cases has dipped significantly from the peak, registered during the first half of the month. It is a big relief for authorities and Dalal Street traders. However, the number of daily cases is close to 2 lakh mark, but the rate of recovery has improved. However, the death toll and different variants of aspergillosis and mycosis remain a concern.

India reported 1,65,553 new Covid-19 cases, with 2,76,309 discharges in the last 24 hours, as per the Union Health Ministry. The toll due to the disease rose to 3,25,972 with 3,460 fresh fatalities.

Vaccination: India had approved Russia’s Sputnik-V as the third vaccine, but the moderate speed of vaccination in the world’s second most populated country remains a concern.

As of the latest available data, total vaccination count stood at 21.2 crore, which is just 15 per cent of the total population. People receiving both the jabs, remains as low as 3.5 per cent of the population.

Q4 earnings: India Inc is now entering the last leg of earnings season. A handful of largecap companies and droves of smaller businesses are scheduled to announce their numbers. This includes companies like ITC, Aurobindo Pharma, Gujarat Gas, Bharat Forge, Muthoot Finance, APL Apollo Tubes, Bank of India, Varun Beverages, PVR and Motherson Sumi among others.

FPI buying: Foreign portfolio investors (FPI) have remained net buyers during all five sessions of the previous week. However, foreign investors have been net sellers of equities in May so far. Domestic institutional investors (DIIs) were net buyers of Indian equities for the third consecutive month in May, keeping the balance tilted in favour of bulls.

Auto sales: Automakers will announce the sales data for May 2021. The numbers are likely to decline due to lockdowns and restrictions in various states. Several companies had shut their plants for weeks amidst the rising rate of infections.

Companies like Maruti Suzuki, Tata Motors, Ashok Leyland, Bajaj Auto, Hero Motocorp and Eicher Motors will be on the radar of investors.

‘Unlocking’ of the states: Several states are poised to lift restrictions and lockdowns in a phased manner. Delhi has relaxed norms for industrial and construction activities, while others are expected to follow suit. The opening up of our economy will have a hold over how the demand shapes up.

Technical outlook: “Nifty50 index crossed lifetime highs and closed the week on a positive note. However, this week’s up move was slow and lacked strength. It is likely the benchmark index could face resistance at higher levels. The bulls are getting tired as the index is trading much higher than its mean levels. Hence, a brief corrective dip cannot be ruled out. 15,160 is the immediate support level for Nifty,” said Nirali Shah, Head of Equity Research, Samco Securities.