Analysts said domestic macroeconomic data releases, global trends and trading activity by foreign investors would determine market sentiment this week.
After a record rally, the market may face volatility this week due to rising valuations and investors will be closely watching global oil benchmark Brent crude and the rupee-dollar for further clues.
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“We expect potential volatility in the equity markets this week. Inflated valuations remain a concern as investors are now focused on the progress of the monsoon and its impact on the rural economy. The Union Budget to be presented in July will be the next focus with high hopes pinned on growth-oriented policies,” said Pravesh Gaur, senior technical analyst at Swastika Investmart.
He said market sentiment would be gauged by closely monitoring the activities of foreign and domestic institutional investors (FII and DII) and crude oil prices.
Globally, the US market is seeing profit-taking from the highs, with key economic data such as the US employment data due for release on July 2, 2024, followed by the US ISM services PMI data on July 3, 2024, he noted.
“Furthermore, US Federal Reserve Chairman Powell’s speech is scheduled for July 2, 2024, while the minutes of the US FOMC meeting will be released on July 3, 2024. Movements in the dollar index and US Treasury yields will also be important factors to watch,” Gaur added.
Last week, the BSE index rose 1,822.83 points or 2.36 percent while the Nifty index rose 509.5 points or 2.16 percent.
The Sensex index rose 7.14% in June, hitting its highest monthly close.
The Sensex index breached the historic 79,000-point mark on Thursday while the Nifty index hit 24,000 points for the first time in intraday trade.
“The market outlook will be driven by key domestic and global economic data including HSBC India Manufacturing PMI, HSBC India Services PMI, S&P Global Manufacturing PMI, Fed speech and initial jobless claims this week,” said Arvinder Singh Nanda, senior vice president at Master Capital Services.
After hitting a fresh all-time high at the opening of trade on Friday, the BSE 30-stock index closed down 210.45 points, or 0.27 per cent, at 79,032.73 and rose 428.4 points, or 0.54 per cent, intraday to hit an all-time high of 79,671.58.
The Nifty fell 33.90 points, or 0.14 percent, to 24,010.60 after rising 129.5 points, or 0.53 percent, to a record high of 24,174 intraday.
“We expect this positive momentum to continue steadily along with individual stock movements. However, economic data due this week will likely keep the market somewhat volatile. Sectors such as auto are expected to remain in focus with the release of monthly sales figures,” said Siddhartha Khemka, senior group vice president and head of research, broking and distribution at Motilal Oswal Financial Services Ltd.
As the new month begins, market participants will first keep a close eye on auto sales data, said Ajit Mishra, senior vice-president, research, Religious Broking.
“Furthermore, the progress of the monsoon will also be closely watched. Indicators from globally, especially the US, are pointing to a positive outlook with major indices continuing their upward trend despite intermittent stability,” he said.
