Sensex, Nifty next week: Dalal Street eyes India's CPI data, US Fed's interest rate decision for guidance

Last week, the markets ended with gains of over 3 percent followed by the 2024 Lok Sabha election results and RBI’s monetary policy decision.

The BJP-led NDA got the winning mandate and Narendra Modi is set to become Prime Minister for the third term. Besides, the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) decided to Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 percent for the eighth consecutive time.

This week, India’s consumer inflation, wholesale inflation, imports and exports data, and industrial production data will be closely watched by traders. Additionally, the US Fed's interest rate decision is also expected to provide cues for stock markets across the globe.

Economic data

Investors will be eyeing major macroeconomic data starting with the data of the Index of Industrial Production (IIP) scheduled to be released on June 12. On the same day, Consumer Price Index (CPI) data for May will also be released. The CPI for April increased by 0.48 percent over the previous month.

The Wholesale Price Index (WPI) will also be under watch, which is scheduled to be released on June 14. India’s wholesale prices increased by 1.26 percent year-on-year (YoY) in April, accelerating from a 0.53 percent rise in the previous month and above market estimates of a 1 percent gain.

The imports and exports data and foreign exchange reserves data will also be released on the same day.

US market data

On the global front, investors will take a cue from some economic data from the world’s largest economy the US starting with inflation data, Fed interest rate decision, FOMC economic projections on June 12, Fed Press Conference, Producer Price Inflation (PPI), Initial Jobless Claims on June 13, Imports and exports data, Baker Hughes Oil Rig Count on June 14.

Global market update

Mahavir Lunawat, Managing Director of Pantomath Capital Advisors said that the trend for the US market trend is likely to remain positive for the week. However, the ISM Manufacturing PMI unexpectedly edged lower to 48.7 in May 2024 from 49.2 in April, below forecasts of 49.6. This weaker data increases the likelihood of interest rate cuts.

Market participants expect the US Federal Reserve to lower borrowing costs twice this calendar year beginning with the first rate cut in September. Q1CY2024 GDP growth second estimates came around 1.3 percent showing a contraction of earlier readings of 1.6 percent growth.

Lunawat added that the European Central Bank (ECB) lowered the three key interest rates by 25 basis points to 4.25 percent in a recent policy meet ended on June 7 in line with expectations, marking a shift from nine months of stable rates after inflation declined by more than 2.5 percentage points since September 2023. However, policymakers signal a cautious approach to further rate cuts.

"Brent crude oil prices declined for the third straight week as the latest OPEC+ decision raised concerns over possible supply surplus. It’s trading around $79-80 per barrel. Investors now look ahead to the monthly US jobs report for more clues on the Fed’s monetary policy path”, Lunawat said.

Nifty outlook

According to Rupak De, Senior Technical Analyst at LKP Securities, Nifty moved up significantly after a flat closing in the previous trading session. The short-term trend looks very positive as the index closed near an all-time high.

“Going forward, the market remains a buy on dips as long as 23,000 is not broken. On the higher end, the index might move towards 23,500-23,600. On the lower end, profit booking might occur only below 23,000," De said.