Key global event and progress of monsoon will dominate market sentiments in the coming week. Investors will closely watch how the monsoon advances in the country. The India Meteorological Department last Wednesday announced the arrival of the monsoon rains in Kerala. That marks the beginning of the four month June-September southwest monsoon season in the country. IMD has forecast above normal rains for the 2016 southwest monsoon season. The government is counting on above-normal precipitation this year to help control food prices and boost farm production.
Meanwhile, upcoming US Federal Reserve’s two-day policy meeting starting on Wednesday and followed by UK’s referendum on EU membership on June 23 have the potential to roil markets. Brexit is weighing down on the markets globally and that’s pretty much weighing on the Indian markets as well, until such time this event is behind us we will continue to see some kind of pressure on the market. Anxiety over the outcome of upcoming global events will keep our markets on the edge.
Among key macro economic data announcements next week includes the release of consumer price index (CPI) data (rural, urban and combined) for the month of May 2016 on Monday while inflation based on wholesale price index (WPI) for the month of May 2016 is scheduled to be released on Tuesday.
Apart from macroeconomic data and trend in global markets, the movement of rupee against the dollar and crude oil price movement will dictate market trend in the near term.
Other global events in the coming week includes Bank of Japan’s monetary policy statement on the factors that affected the most recent interest rate decision and Bank of England’s monetary policy committee members vote on where to set the rate. Technically, we suggest maintaining buy on dips till Nifty holds above 8,000. At the same time, it’s advisable to keep leveraged positions partially hedged, considering the possibility of rise in volatility in days to come.
(The author is founder, director at Trade Smart Online)