Sensex, Nifty this week: From India’s manufacturing data to US unemployment rate, factors that may drive Dalal Street

The past week turned out to be a remarkable one for Indian equity markets as Sensex and Nifty hit fresh record-high levels. This week, the market will be looking at major economic data such as S&P Global India Manufacturing PMI, Services PMI, Composite PMI, monthly automobile sector sales, and US trade balance to be released during the week.

Indian economic events: The coming week marks the start of the new month and auto stocks would be buzzing on reporting of monthly sales figures. Market participants would be watching out for S&P Global Manufacturing PMI, scheduled to be released on July 3. The S&P Global India Manufacturing PMI increased to 58.7 in May 2023 from 57.2 a month earlier, exceeding market forecasts of 56.5. Traders will also be looking forward to S&P Global Services PMI, S&P Global Composite PMI scheduled to be released on July 5. The S&P Global India Services PMI was at 61.2 in May 2023, compared to market forecasts of 60, and after April's near 13-year high of 62.

US market data: On the global front, investors would be eyeing a few economic data from the world's largest economy, starting with S&P Global Manufacturing PMI, ISM Manufacturing Employment on July 3, followed by Redbook, Factory orders, FOMC Minutes on July 5, Balance of Trade, Initial Jobless Claims, S&P Global Services PMI Final, ISM Services PMI, ISM Services Employment, on July 6, Non-Farm Payrolls, Unemployment Rate, Baker Hughes Total Rig Count on July 7.

Outlook for the coming week: Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities, said that the investors remain positive about the long-term prospects of the domestic market due to healthy macroeconomic indicators while global cues are also improving as concerns over a recession in the US eases.

"The US economy showed much stronger-than-expected growth in the first quarter than previously thought, according to a big upward revision Thursday from the Commerce Department. The Gross Domestic Product (GDP) increased at a 2 per cent annualized pace for the January-through-March period, up from the previous estimate of 1.3 per cent and ahead of the 1.4 per cent Dow Jones consensus forecast."

NIFTY - Vakil said that the Nifty rose for the fourth straight session to end the day, with the gains of 217 points to close at a new all-time high of 19189. "For the week, Nifty was up by 2.8 per cent. Previous resistance of 18,887 is expected to interchange its role as a support for the Nifty going forward. The near-term uptrend of the Nifty remains intact and one may expect the Nifty to reach up to 19500 levels in the coming week. Immediate support is at 19050 levels."

Bank Nifty: Rupak De, Senior Technical analyst at LKP Securities, said, that Bank Nifty experienced a breakthrough as it opened above its robust resistance level of 44,500. The index has been posting gains for three days in a row. "The Relative Strength Index (RSI) indicates strong momentum and bullish sentiment in the index. On the weekly chart, the index has given a downwards consolidation breakout, suggesting a rise in optimism. Therefore, the trend looks positive for the short term. Immediate support is visible at 44,500 where Put writers have added significantly in the open interest; while the 45,000 strike price has the highest open interest in calls, which suggests that Bank Nifty may encounter some resistance at that level."

Factors behind market performance: Vinod Nair, Head of Research at Geojit Financial Services, said, the last week commenced with a relatively flat trend in the domestic market, as the global equities exhibited a negative bias due to concerns over economic growth stemming from political instability in Russia. However, positive economic surprises in the global market and the progress of the southwest monsoon provided a much-needed boost, enabling the domestic market to achieve new highs with renewed vigor.

Nair further said that the market's upward momentum was further supported by strong inflows from FIIs, the merger update of HDFC, and a narrowing current account deficit. "Globally, investor confidence was uplifted by favourable revisions in US Q1 GDP, a decline in jobless claims, and positive outcomes from the US bank stress test conducted by the Fed. IT, Pharma, and Auto sectors emerged as top performers throughout the week, making significant contributions toward overall market performance. Additionally, mid-and small-cap stocks recovered from their losses of the previous week, indicating a regained investor interest in these segments," he added.

Also Watch: Top stocks of the week ending June 30, 2023: HDFC AMC, JBM Auto, ICICI Securities, Kalyan Jewellers, India Cements, others

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