US markets, FII action among 7 factors that can steer D-Street this week

Indian benchmark indices ended the week with gains of 1%, marking their third consecutive weekly advance. The rally was driven by rate-sensitive sectors, including banking, auto, and real estate, following a surprise 50-basis-point repo rate cut by the Reserve Bank of India (RBI) on Friday. A host of important domestic and global events lined up for the coming week are expected to influence stock market movements when trading resumes on Monday.

On Friday, the Nifty jumped 252.15 points, or 1%, to close at 25,003.05.

Commenting on the trend, Rupak De, Senior Technical Analyst at LKP Securities, noted that the RBI’s policy bazooka sparked a sharp rally, helping the index close above the 25,000 mark for the first time in several sessions. This signaled growing optimism among market participants, he noted.

“Typically, a rally followed by consolidation often leads to an upward breakout. This time, too, we expect Nifty to break out of its recent consolidation range. On the higher side, resistance is seen at 25,150. A move beyond this level — or even a sustained close above 25,000 — could pave the way for a rally toward 25,350. On the downside, support is placed at 24,850. A breach below this level may weaken the ongoing rally and trigger some profit-booking,” De said.

Key factors likely to impact market movement this week:

1. US markets

US stocks rose on Friday after a better-than-expected jobs report eased concerns about the economy. Tesla also rebounded from a sharp decline the previous day, while technology stocks extended their gains.

Indian markets are expected to take cues from Wall Street, which ended with strong gains on Friday. The Dow Jones Industrial Average closed at 42,762.90, up 443.13 points or 1.05%, while the S&P 500 rose 61.06 points or 1.03% to finish at 6,000.36. The Nasdaq Composite advanced 231.50 points or 1.2% to close at 19,529.90.

2) FII/DII Action

Market action will largely depend on the behavior of foreign institutional investors (FIIs). On Friday, FIIs bought shares worth Rs 1,009.71 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 9,342.48 crore.

After being net buyers in April and May, FIIs have so far turned net sellers in June, offloading Indian equities worth Rs 8,749 crore.

3) Technical Factors

Nifty has formed a bullish engulfing candle on the weekly chart as buying demand—on expected lines, emerged from the lower band of the past three weeks’ consolidation range, indicating strength, Bajaj Broking Research said in a note. Nifty is currently positioned at the upper band of the consolidation range of 24,400–25,100.

“We expect the index to move above the upper band of the range and head higher towards the immediate hurdle of 25,250 and then 25,500 in the coming weeks. Any dips should be viewed as a buying opportunity, with key short-term support placed at 24,700 and 24,400—levels that coincide with the previous breakout zone, the last three weeks’ lows, and a key retracement area,” the brokerage added.

4) Rupee vs Dollar

The Indian rupee strengthened modestly on Friday as the RBI’s steepest rate cut in five years boosted local equities, helping the currency gain despite the dollar firming against major peers. The rupee closed at 85.6250 against the U.S. dollar, up from its previous close of 85.79. However, it declined 0.2% for the week.

India’s benchmark 10-year bond yield fluctuated between gains and losses as traders absorbed the central bank’s policy shift from an ‘accommodative’ to a ‘neutral’ stance. The yield was last quoted slightly higher at 6.2237%. Meanwhile, dollar-rupee forward premiums dropped following the rate cut, with the 1-year implied yield falling by 10 basis points to 1.81%.

5) Corporate Action

A flurry of corporate actions is lined up this week, including record dates for dividends, stock splits, rights issues, and bonus shares across a five-day trading window. Nearly three dozen companies are scheduled for such activity.

Investors will be closely watching five Tata Group stocks and five Adani Group stocks that will trade ex-dividend this week.

Tata Group: Nelco, Tata Investment Corporation, Tata Elxsi, Tata Chemicals, and Trent

Adani Group: ACC, Adani Enterprises, Adani Ports and Special Economic Zone (APSEZ), Ambuja Cements, and Adani Total Gas

6) IPOs This Week

No mainboard IPO is set to open this week, but two SME offerings will be available:

Jainik Power Cables IPO: Opens Tuesday, June 10, and closes June 12. Price band: Rs 100–110

Sacheerome IPO: Opens Monday, June 9, and closes June 11. Price band: Rs 96–102

Both issues will list on the NSE.

7) Crude Oil

Crude oil prices continue to play a crucial role in market sentiment due to their influence on inflation.

US WTI: Ended at $64.77, up $1.40 or 2.21%

Brent: Hovered at $66.47, up $1.31 or 2%

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)