Markets to focus on Q2 results, monsoon

Despite the escalating trade war, higher oil prices and weakening of rupee, the markets, buoyed by minutes from the Federal Reserve June policy meeting and the Cabinet’s approval for a hike in minimum support prices, closed higher amidst range-bound low volumes last week.

Sensex gained 234 points or 0.66 per cent to close at 35,658 and Nifty ended higher by 58 points or 0.54 per cent to settle at 10,773. Bank Nifty closed higher by 130 points or 0.49 per cent. Underperforming the indices, the mid-cap index fell 0.4 per cent and the small-cap index inched forward by 0.2 per cent.

The breadth remained neutral amidst low volumes as buying was concentrated in index heavyweights. FIIs continued to remain sellers in the cash segment but were seen hedging their positions by remaining buyers in the derivatives segment. However, bouts of buying were seen from DIIs supporting the market at lower levels.

The rupee is one of the worst performing currencies this year. Since January, it has weakened over 7 per cent against the dollar.  Fears over a slowdown owing to rising crude prices, widening CAD concerns amid trade wars have kept rupee on tenterhooks. Observers feel that RBI intervention, a possible hike in rates along with reasonable growth prospects may support rupee.

Near term direction will be dictated by Q2 earnings, domestic and global macro data, trend in global markets, investment by foreign as well as domestic investors, progress of monsoon, the movement of rupee and crude price.

For the week ahead, chartists predict trading range of 35,150-36,100 and 10,625-10,920 for indices.