Truncated Market Sessions, GST Council Meet, BoE Rate Decision: The Week Ahead

The equity markets' direction during the truncated week will depend on the slew of global central bank rate decisions in China, and other European countries. After the four-day trading session, the 53rd Goods and Services Tax Council meeting will be held in New Delhi.

The markets will be shut on Monday on account of Bakri Eid, also known as Eid-al-Adha. Even after the holiday, traders will get triggers from the domestic front during the week.

After an eventful two weeks, the markets were back to hitting fresh life highs, with strong domestic participation. But, the benchmark index's tone was subdued from start to finish, resulting in modest gains for both the Nifty and Sensex.

The upcoming week, shortened by a holiday on Monday, will see participants looking to global markets, particularly the US, for cues in the absence of major events, according to Ajit Mishra, special vice president-research, Religare Broking Ltd.

Recent movements in the Nifty index suggest a time-based correction, yet the overall tone remains positive, Mishra said.

The benchmark gauges rose for the second week in a row as traders were encouraged by positive domestic cues.

The indices ended at a fresh closing high on Friday, tracking sharp gains in shares of HDFC Bank Ltd. and Reliance Industries Ltd. The NSE Nifty 50 closed 66.70 points, or 0.29%, higher at 23,465.60, and the S&P BSE Sensex ended 181.88 points, or 0.24%, up at 76,992.77.

The NSE Nifty 50 rose 0.75% and the S&P BSE Sensex gained 0.39% this week. During the week, 10 sectors advanced and two declined, out of 12 on the NSE. The NSE Nifty Realty turned out to be the best performing sector, while the NSE Nifty IT emerged as the top loser.

Indications suggest further consolidation in the Nifty index and traders are advised to use any dip around the 23,100–23,300 zone to initiate fresh positional longs, Mishra said.

Traders will not see many cues on the domestic front during the truncated week.

In the state loan auction on June 18, six states will raise Rs 95 billion via bond sale.

On the last trading day of the week, S&P Global's manufacturing, services and composite Purchasing Managers' Index for June will be released. India's service sector saw its growth decelerate to the lowest in five months in May, while the manufacturing activity continued to ease for the second straight month to a three-month low.

The 53rd Goods and Services Tax Council meeting, the first since Prime Minister Narendra Modi began his third term, is scheduled for June 22 in New Delhi.

The week ahead holds a number of key macro drivers, which will affect how traders play the markets.

On Monday, the People’s Bank of China is expected to hold its benchmark one-year medium-term lending facility rate at 2.50%, following which the country's commercial banks will also likely keep their one-year loan prime rates unchanged.

In Japan, economists expect inflation to heat up, giving the Bank of Japan the definitive sign it is waiting for to raise rates again.

In Europe, major central banks are likely to keep interest rates on hold following the US Federal Reserve's cue last week. Economists polled by Bloomberg suggest that the Bank of England is also likely to keep policy unchanged in June as the UK election approaches. UK's inflation data will also be released a day before the BOE decision, with analysts expecting headline CPI to hit the 2% target for the first time in nearly three years.

The second reading of inflation is due in the Euro Area, which will offer an insight into what drove the larger-than-expected uptick in May.

Traders will also await flash PMI for the Euro Area and UK for June in order to gauge growth in the region.

Further west, industrial production in the US is expected to rebound modestly in May, as opposed to April’s weaker-than-expected print as manufacturers see demand cooling down.

With three mainboard and five SME public issues, primary markets will be back in focus during the week. The primary offerings of Stanley Lifestyle Ltd., DEE Development Engineers Ltd. and Akme Fintrade India will open for subscriptions during the week.

Medicamen Organics Ltd., Dindigul Farm Product Ltd., GEM Enviro Management, Durlax Top Surface Ltd. and Falcon Technoprojects India Ltd. will see bidding in the SME segment during the week.

On the listings front, the shares of Le Travenues Technology Ltd., the parent company of online travel agency Ixigo, will debut on the exchanges on June 18. The Rs 740.10-crore IPO was subscribed 98.34 times on its final day.

On the corporate actions front, L&T Finance Ltd., LTIMindtree Ltd., Larsen & Toubro Ltd., Bajaj Finance Ltd., Bajaj Finserv Ltd., and Bharat Petroleum Corp. will be the big names that have record dates for their interim/final dividend in the coming week.

Meanwhile, Bhandari Hosiery Exports Ltd., and Sobha Ltd. will engage in a rights issue of equity shares during the week.

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