Lok Sabha Election Verdict, RBI MPC Meet, T20 World Cup: The Week Ahead

The upcoming week will see a slew of major triggers, with results for the 2024 Lok Sabha elections coming up, along with the Reserve Bank of India's monetary policy committee meeting outcome. All this, including international events, could decide the course of the markets during the week.

Election verdict on June 4, S&P Global manufacturing and services PMI data, RBI MPC meet outcome, a slew of data in the Eurozone and the US jobs data are among major events to watch out for during the week.

While equity markets fell during the week after two weeks of gains, the fourth quarter earnings season for Nifty companies has come to an end.

Investors are adjusting their portfolios to align with fundamentally strong sectors and stocks, as robust earnings and better-than-expected GDP growth in the January-March period will continue to provide a buffer on valuation in the medium term, according to Vinod Nair, head of research, Geojit Financial Services Ltd.

The Gross Domestic Product rose to 7.8% in the quarter ended March 31, 2024. While for the full year, GDP is estimated to have grown by 8.2%.

The short-term direction will hinge on the general election results, Nair said. "However, the release of major economic indicators such as RBI policy, PMI data, and auto sales numbers will provide investors with a more comprehensive perspective on the market."

Last week, Nifty recorded its worst fall since the week ended May 10, as the benchmark lost 1.86%.

Benchmark equity indices erased most of their early loss to end marginally higher on Friday. The NSE Nifty 50 closed 42.05 points, or 0.19% higher at 22,530.70, while the S&P BSE Sensex ended 75.71 points, or 0.10% up at 73,961.31.

The market breadth was skewed in the favour of the sellers as 1,978 stocks declined, 1,845 rose and 92 remained unchanged on BSE.

During the week, all sectors except Nifty PSU Banks and Nifty Bank fell, with Nifty IT and Nifty Energy falling the most by 4.25% and 3.31%, respectively.

Due to a lack of positive triggers, the bulls faced resistance at higher levels, leading to profit booking across the sector, Nair said. "The caution ahead of the exit poll results and the fear of any knee-jerk reaction prompted market participants to sideline riskier assets."

Nifty June futures were up by 0.34% to 22,700.7 at a premium of 170 points, with its open interest up by 8.16%. Nifty Bank June futures were up by 0.7% to 49,352.35 at a premium of 458.4 points. While, its open interest was down by 7.34%.

Open interest distribution for the Nifty June 6 series indicates that the 20,200 level is seeing the most put strikes, and call strikes of 23,000 have the maximum open interest.

For the Bank Nifty options' June 5 expiry, the maximum call open interest was at 57,000 and the maximum put open interest was at 40,000.

Nifty took resistance around the upper channel of 23,100 levels and tumbled down like a pack of cards, according to Ashwin Ramani, derivatives and technical analyst, SAMCO Securities. The call writers have sizeable positions at the 23,100 strike and if they exit from the 23,100 strike, then Nifty is likely to continue its ongoing rally, he said.

The biggest event for the domestic market will be the results of the 2024 Lok Sabha election, which will be announced after counting on June 4. The final phase of elections will be held on Saturday.

Since the first phase, stock markets have seen volatility spike up like never before, due to uncertainty over the election verdict given lower voter turnout. Phase 6 had an all-India voter turnout of 59%, compared to 57.82% in phase 5.

On June 3, traders will also track the S&P Global Manufacturing PMI to position their trades in the market. On June 5, S&P Global Services and Composite PMI for April will also be announced.

Another big trigger for the markets will be the RBI monetary policy meeting that is beginning on June 5. Changes in key rates will be announced on June 7 by the governor, followed by a press conference with media.

Meanwhile, the ninth edition of the ICC Men's T20 World Cup is set to kick off on June 1. Team India will begin its campaign against Ireland on June 5, at the Nassau County International Cricket Stadium, New York, followed by the much-awaited clash against arch-rivals Pakistan on June 9 at the same venue.

The Euro zone will see a slew of data coming in, including S&P Global Manufacturing PMI on June 3 and GDP data on June 7. The interest rate decision for Russia will also be announced on June 7.

In the US, data for the trade and initial jobless claims is scheduled for June 6.

The International Atomic Energy Agency board will meet in Vienna on June 3. The board's discussions will range from applications for membership of the agency the restoration of the sovereign equality of Member States in the IAEA.

Following a subdued activity in the primary markets in the last five session, the week starting June 3 will be muted, with no mainboard public offerings and listings.

Two companies in the NSE SME segment will raise funds worth Rs 152 crore, via an initial public offering.

Sattrix Information Security will raise Rs 21.78 crore and the issue is entirely a fresh issue of 18 lakh shares. While, Kronox Lab Sciences Ltd. will raise up to Rs 130.1 crore and is also entirely an offer for sale of 0.96 crore shares.

Meanwhile, seven companies—TBI Corn Ltd., Aimtron Electronics Ltd., Associated Coaters Ltd., Ztech India Ltd., Beacon Trusteeship Ltd. and Vilas Transcore Ltd.—will debut in the NSE SME segment during the week.

On the corporate actions front, ITC Ltd., Manappuram Finance Ltd., ICICI Lombard General Insurance Co. and Indian Hotels Co. will be the big names that have record dates for their interim/final dividend in the coming week.

Meanwhile, Shardamotor Industries Ltd. and Anand Rathi Wealth Ltd. will engage in a buyback of shares during the week.

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