US GDP data, FPI activity to Fed chair’s speech: Top 5 triggers that may dictate India stock market next week

Stock market next week: Amid participatory rally on Dalal Street in last few sessions, BSE Sensex hit a new high of 63,601 on Thursday last week while Bank Nifty climbed to a new peak of 44,498 on 16th June 2023. However, on three out of five sessions in the week gone by, NSE Nifty missed to scale a new high as it missed by just one point to improve its current high of 18,887 mark. As small-cap and mid-cap indices have been in uptrend and current rally is a participatory rally, stock market experts are expecting that NSE Nifty may hit a new peak in upcoming week.

Speaking on Indian stock market outlook for next week, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors said, "While the benchmark Index Nifty has reversed course after testing levels close to record highs, eyes are keenly awaiting when the markets can scale a new peak. A flurry of data points would sway the direction of the markets in a holiday truncated week, where they would closely eye the first quarter domestic current account data. It will provide insight into India's trade deficit and the current account balance. A wider trade deficit could weigh on the rupee and the benchmark indices. Besides, we have the final reading of the first quarter US GDP data and the PCE price index for May along with the Fed Chair’s speech that could throw more light on the central bank’s monetary tightening path."

Sugandha went on to add that a strong set of data could boost risk appetite and support the market, while a weak set of data could weigh on risk assets. The dollar index movement will also be a key factor to watch out for.

So, here we list out top 5 triggers that may dictate Indian stock market next week:

1] India-US deals during PM Modi's visit: Suggesting Indian stock market investors and observers to remain vigilant about the Indo-US agreements during PM Modi's visit to US, Omkar Kamtekar, Research Analyst at Bonanza Portfolio said, "Prime Minister Narendra Modi’s visit to US is full swing which has already boosted the markets back at home, with the SENSEX scaling an all-time high. During the week a slew of deals were signed between Indian and US entities across industries such as defense, semi-conductor, space exploration and more. More good news is expected in terms of deal wins and trade agreements being signed in the upcoming week."

2] US GDP data: "On Thursday, 29th June, the US GDP data is to be published. The US economy has been slowing down at a steady pace and is expected to be in a recession by the end of the year. This will have direct impact on various economic parameters affecting many sectors especially related to consumption and discretionary spending," Omkar Kamtekar of Bonanza Portfolio said.

3] Arrival of monsoon in India: "Arrival of Monsoons- Even though there are speculations that El Nino might hit the Indian monsoons but IMD is positive this year. India gets 70% of its annual rainfall from monsoons and contributes 20% to the GDP. We can see both gainers and losers depending on how the monsoons turn out this year. Bad monsoons might trigger food inflation, beginning the high inflation circle once again," said Divam Sharma, Founder at Green Portfolio PMS.

4] FPI activity: "We saw inflow of 43000 crore in May which is at 9 month high. Sensex also hit an all time high this week, maintaining its overperformance as compared to peers. RBI kept the interest rates unchanged. Even though India’s PE is high, its growth trajectory is going to keep FPI motivation high," said Divam Sharma of Green Portfolio.

5] US Fed Chair's speech: "Next week global markets would be eagerly awaiting for US Fed Chair Jerome Powell's speech as he would be able to give proper idea about the US Fed's intentions towards interest rate hike. In recent FOMC meeting, US Fed has already said that two more interest rate hike by end of 2023 is possible. But, any interest rate hike in near term would push rally in US dollar, which may work as a dampener for for emerging equity markets across globe," said Anuj Gupta, Vice President — Research at IIFL Securities.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.