Market outlook: Caution over GST, derivatives expiry to affect equities

Derivatives expiry coupled with crude oil prices and direction of foreign funds` movement are expected to affect the equity charts during the upcoming week.

Market observers have opined that key equity indices might remain range-bound ahead of the Goods and Services Tax (GST) implementation slated from July 1.

"The markets next week are expected to remain range bound with a lower bias, as investors would await to assess the GST implementation impact," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

Apart from GST implementation, derivatives expiry on June 29, Thursday will be the other major theme for the week starting Monday.

"As the expire session for derivatives approaches on Thursday, we expect the market may remain volatile as traders roll-over positions in the Futures and Options (F&O) segment from the month of June 2017 series to July 2017 series," said Vijay Singhania, Founder-Director, Trade Smart Online.

Besides, market participants will track macro-data such as the Index of ECI (eight core industries), external debt and fiscal deficit which will be released during the week starting June 26.

In addition, further reforms and restructuring of stressed assets of the banking sector are expected to support the equity indices at lower levels.

"Market will continue to get support at lower levels due to reforms in banking sector, falling inflation and on expectations of rate cut," Vinod Nair, Head of Research, Geojit Financial Services, told IANS.

"Given these positives, DIIs (domestic institutional investors) continue to pour money into the market at lower levels."

Figures from the National Securities Depository revealed that foreign portfolio investors (FPIs) divested Rs 1,053.12 crore, or $163.86 million in the equities segment, during June 19-23.

On the rupee front, a range of 64.30-70 to a greenback is expected for the upcoming week.

"We need to keep an eye on global financial markets, where unwinding of stimulus from the US Fed and taper from ECB (European Central Bank) and BOJ (Bank of Japan) may increase volatility and adversely impact the rupee," said Anindya Banerjee, AVP, currency derivaties at Kotak Securities.

"Incase the risk aversion intensifies, then rupee may test 64.80-65 region on spot."

Last week, the Indian rupee weakened by 10 paise to 64.53 as against the US dollar from it`s last week`s close at 64.43 to a greenback.

On technical-levels, the NSE Nifty is expected to resume its uptrend after crossing the immediate resistance level of 9,699 points.

"Technically, while the markets have corrected this week, the Nifty remains in an intermediate uptrend," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"The uptrend could resume once again if the immediate resistances of 9,699 points are taken out. Crucial supports to watch for some weakness are at 9,560 points."

Last week, key equity indices ended on a flat note, as weak global cues and profit booking subdued investors` sentiments.

Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE closed at 31,138.21 points -- up 81.81 points or 0.26 per cent from its previous week`s close.

Conversely, the NSE Nifty inched lower by 13.1 points or 0.13 per cent to close the week`s trade at 9,574.95 points.

The Indian equity markets will remain closed on Monday on account of Id-Ul-Fitr.