Sensex, Nifty to Keep an Eye on Macro Data, Monsoon and DHFL Crisis This Week
The DHFL liquidity crisis may spook investors as it's default in debt repayment led to major selloff on stock market counters.
File photo of DHFL logo (Image : Reuters).
The stock market rally hit a pause button last week after the Reserve Bank of India (RBI) cut policy repo rate by a widely expected 25 basis points, prompting investors to book profits. After rising over 5% in the previous three weeks, the BSE Sensex fell 0.25% and the Nifty 50 slipped 0.44% in the week ended 7 June.
This week, the stock market indices will be looking forward to the release of the industrial output and inflation data, monsoon trends, while also keeping an eye on the Union Budget for 2019-20 that is due on 5 July.
On Monday, the Sensex and Nifty may open higher as global stock markets rallied last Friday after weak US jobs data fuelled rate cut hope there. The government will release industrial output data for April and retail inflation data for May on Wednesday.
The factory output data for April is critical since it showed 0.1% contraction in March compared with the previous month due to a slowdown in manufacturing. Growth for full fiscal 2018-19 was 3.6% due to declining growth of private consumption, tepid increase in fixed investment and muted exports.
Retail inflation in April also increased marginally to 2.92% from 2.86% in the previous month. The inflation based on consumer price index (CPI), however, had stood at 4.58% in April 2018.
Other data points to watch in the coming week would be current account balance for the March quarter on Thursday, and wholesale inflation data, foreign exchange reserves data for week ended 7 June and the balance of trade data for May on Friday.
Apart from macro data, the current liquidity crisis at the Dewan Housing Finance Ltd (DHFL) may also spook investors. DHFL’s default in debt repayment led to a major selloff on some stock market counters last week, especially those of banks and fund houses which have exposure to its debt.
However, DHFL has paid some dues on Friday, which may ease some investor concerns. It would be interesting to see how the government and RBI would make sure that the situation at DHFL doesn’t convert into a full-blown crisis.
Meanwhile, the southwest monsoon hit Kerala on Saturday after a week’s delay. While the India Meteorological Department (IMD) has predicted the monsoon rainfall to be normal this season, there are apprehensions that the prevailing weak El Nino conditions could impact rains in the first two months.
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