After a nail-biting week, the Indian stock market staged a dramatic comeback on Friday, pushing benchmark indices to a 1.6% weekly gain and snapping a three-session losing streak. Yet, a palpable tension hangs in the air on account of the shadow cast by the escalating Israel-Iran conflict. As the second week of direct warfare unfolds, the US joined Israel in striking Iranian nuclear facilities. Global markets including the D-Street will watch developments unfold with bated breath when trading resumes on Monday.
Factors that are likely to impact movement when markets reopen this week:
1) Israel-Iran conflict
The Israel-Iran conflict entered a dangerous new phase with the US striking Iranian nuclear sites and directly joining Israel’s war. The targeted locations reportedly include the highly fortified Fordow, Natanz, and Esfahan nuclear facilities. The US B-2 bombers were involved in strikes on Iran's nuclear sites. One of the most advanced and iconic aircraft in the world and developed and built by Northrop Grumman, it is equipped to carry massive bombs that experts say would be ideal to strike the sites.
Iran has vowed to retaliate, raising fears of broader conflict in the Middle East. In response to growing tensions, the US has begun evacuation flights from Israel.
2) US markets
U.S. stocks ended lackluster on Friday notwithstanding better-than-expected Accenture revenue estimates for the third quarter. But the Israel-Iran conflict weighed on Wall Street as investors remained cautious over the developments regarding the Israel-Iran conflict.
Indian markets will also take cues from Wall Street which ended with sharp gains on Friday. Dow 30 closed at 42,206.80, rising by 35.16 points or 0.08% while the S&P 500 finished 13.03 points or 0.22% lower at 5,967.84. Nasdaq Composite closed at 19,447.40, down 98.86 points or 0.51%.
3) IPO Watch
The anticipation for an action-packed week for the primary market is getting stronger with 13 IPOs on the anvil. They are expected to collectively raise nearly Rs 16,000 crore. In this, five mainboard IPOs will be launched with HDFC Bank's NBFC subsidiary HDB Financial Services IPO hitting the D-Street. In the SME segment eight companies will vie for investor attention and not to mention numerous listings.
Read More: IPO Tsunami: HDB Financial Services, 12 others to raise up to Rs 16,000 crore next week
4) Sensex rejig
The BSE Sensex is set for a reshuffle next week, with Tata Group’s Trent and Bharat Electronics (BEL) entering the benchmark 30-share index, replacing Nestle India and IndusInd Bank. The changes, announced earlier, will take effect from Monday, June 23, while passive fund flows linked to the rejig are expected on June 20.
IndusInd Bank, which has faced scrutiny over governance concerns in recent months, will also be excluded. The lender may see outflows of $145 million, equivalent to about 1.9 times its ADV.
5) Corporate action
Plenty of corporate action is lined-up this week with record dates for dividends, stock splits, rights issue and bonus shares over the five-day trading week. Nearly four dozen companies will see the action unfold.
Among the widely tracked stocks that will be in focus will be HDFC Bank, Vedanta, Hindustan Unilever (HUL), Polycab, Samvardhana Motherson International, Automobile Corporation of Goa, Bajaj Finserv, Bajaj Holdings & Investment and Cipla.
Read Full Story: Corporate actions next week: Record dates for HDFC Bank, HUL, Vedanta dividend. Check bonus issue, stock split details
6) FII / DII action
Market actions will rely on how foreign institutional investors (FIIs) behave. On Friday, FIIs bought shares worth Rs 7,940.70 crore while the domestic institutional investors (DIIs) were net sellers at Rs 3,049.88 crore.
After remaining net buyers in April and May, FIIs so far have been net sellers of Indian equities in June at Rs 4,192 crore.
Also Read: FIIs buy stocks worth Rs 8,710 crore this week, narrow June sell-off to Rs 4,192 crore
7) Technical Factors
Nifty formed a sizable bull candle with a higher high and higher low signaling resumption of up move after recent corrective consolidation and the index in the process closed firmly above the 25,000 levels signalling strength, a note by Bajaj Broking said.
It anticipates the index to retest the upper boundary of the recent five-week consolidation zone, currently pegged near the 25,200 mark.
“A decisive breakout above this resistance band could open the door for an upward extension towards the 25,500 zone in the near term. As long as the index sustains above the prior week's swing low of 24,700, the near-term bias is expected to remain constructive. Key short-term support is placed at 24,500–24,400 zone being the confluence of the 50-day EMA and the lower band of the last five weeks consolidation range,” the brokerage said.
8) Rupee Vs Dollar
The Indian rupee modestly strengthened Friday, its first advance in six days tracking inflows into domestic equities, to close at 86.58 per dollar. The rupee climbed 14 paise despite volatile oil prices and no immediate signs of a truce in the Israel-Iran conflict.
The strength in the rupee came after US President Donald Trump signalled to avoid any precipitate action on Iran. Rebalancing of the FTSE Russell index also led to some flows, traders said. The rupee traded between 86.54 and 86.67 to the dollar on Friday.
9) Crude Oil
Crude oil prices remain critical for the stock markets as they have the potential to alter the inflation dynamics in a country. They have jumped nearly 10% over the past month and with the deepening crisis, the fears of price escalation are growing.
The US WTI oil contracts ended at $74.04, up by $0.54 or 0.73% while Brent oil futures were hovering near $77.01, higher by $1.53 or 1.94%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Factors that are likely to impact movement when markets reopen this week:
1) Israel-Iran conflict
The Israel-Iran conflict entered a dangerous new phase with the US striking Iranian nuclear sites and directly joining Israel’s war. The targeted locations reportedly include the highly fortified Fordow, Natanz, and Esfahan nuclear facilities. The US B-2 bombers were involved in strikes on Iran's nuclear sites. One of the most advanced and iconic aircraft in the world and developed and built by Northrop Grumman, it is equipped to carry massive bombs that experts say would be ideal to strike the sites.
Iran has vowed to retaliate, raising fears of broader conflict in the Middle East. In response to growing tensions, the US has begun evacuation flights from Israel.
2) US markets
U.S. stocks ended lackluster on Friday notwithstanding better-than-expected Accenture revenue estimates for the third quarter. But the Israel-Iran conflict weighed on Wall Street as investors remained cautious over the developments regarding the Israel-Iran conflict.
Indian markets will also take cues from Wall Street which ended with sharp gains on Friday. Dow 30 closed at 42,206.80, rising by 35.16 points or 0.08% while the S&P 500 finished 13.03 points or 0.22% lower at 5,967.84. Nasdaq Composite closed at 19,447.40, down 98.86 points or 0.51%.
3) IPO Watch
The anticipation for an action-packed week for the primary market is getting stronger with 13 IPOs on the anvil. They are expected to collectively raise nearly Rs 16,000 crore. In this, five mainboard IPOs will be launched with HDFC Bank's NBFC subsidiary HDB Financial Services IPO hitting the D-Street. In the SME segment eight companies will vie for investor attention and not to mention numerous listings.
Read More: IPO Tsunami: HDB Financial Services, 12 others to raise up to Rs 16,000 crore next week
4) Sensex rejig
The BSE Sensex is set for a reshuffle next week, with Tata Group’s Trent and Bharat Electronics (BEL) entering the benchmark 30-share index, replacing Nestle India and IndusInd Bank. The changes, announced earlier, will take effect from Monday, June 23, while passive fund flows linked to the rejig are expected on June 20.
IndusInd Bank, which has faced scrutiny over governance concerns in recent months, will also be excluded. The lender may see outflows of $145 million, equivalent to about 1.9 times its ADV.
5) Corporate action
Plenty of corporate action is lined-up this week with record dates for dividends, stock splits, rights issue and bonus shares over the five-day trading week. Nearly four dozen companies will see the action unfold.
Among the widely tracked stocks that will be in focus will be HDFC Bank, Vedanta, Hindustan Unilever (HUL), Polycab, Samvardhana Motherson International, Automobile Corporation of Goa, Bajaj Finserv, Bajaj Holdings & Investment and Cipla.
Read Full Story: Corporate actions next week: Record dates for HDFC Bank, HUL, Vedanta dividend. Check bonus issue, stock split details
6) FII / DII action
Market actions will rely on how foreign institutional investors (FIIs) behave. On Friday, FIIs bought shares worth Rs 7,940.70 crore while the domestic institutional investors (DIIs) were net sellers at Rs 3,049.88 crore.
After remaining net buyers in April and May, FIIs so far have been net sellers of Indian equities in June at Rs 4,192 crore.
Also Read: FIIs buy stocks worth Rs 8,710 crore this week, narrow June sell-off to Rs 4,192 crore
7) Technical Factors
Nifty formed a sizable bull candle with a higher high and higher low signaling resumption of up move after recent corrective consolidation and the index in the process closed firmly above the 25,000 levels signalling strength, a note by Bajaj Broking said.
It anticipates the index to retest the upper boundary of the recent five-week consolidation zone, currently pegged near the 25,200 mark.
“A decisive breakout above this resistance band could open the door for an upward extension towards the 25,500 zone in the near term. As long as the index sustains above the prior week's swing low of 24,700, the near-term bias is expected to remain constructive. Key short-term support is placed at 24,500–24,400 zone being the confluence of the 50-day EMA and the lower band of the last five weeks consolidation range,” the brokerage said.
8) Rupee Vs Dollar
The Indian rupee modestly strengthened Friday, its first advance in six days tracking inflows into domestic equities, to close at 86.58 per dollar. The rupee climbed 14 paise despite volatile oil prices and no immediate signs of a truce in the Israel-Iran conflict.
The strength in the rupee came after US President Donald Trump signalled to avoid any precipitate action on Iran. Rebalancing of the FTSE Russell index also led to some flows, traders said. The rupee traded between 86.54 and 86.67 to the dollar on Friday.
9) Crude Oil
Crude oil prices remain critical for the stock markets as they have the potential to alter the inflation dynamics in a country. They have jumped nearly 10% over the past month and with the deepening crisis, the fears of price escalation are growing.
The US WTI oil contracts ended at $74.04, up by $0.54 or 0.73% while Brent oil futures were hovering near $77.01, higher by $1.53 or 1.94%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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