GST meeting outcome, Fed policy report key triggers to drive markets next week

Domestic equity indices Sensex and Nifty halted their record-breaking rally on Friday (June 21) and buckled under selling pressure as investors pared exposure to oil & gas, capital goods, and FMCG stocks amid a bearish trend in global markets.

Snapping its six-day rally, the 30-share BSE Sensex declined 269.03 points or 0.35 per cent to settle at 77,209.90. The Nifty rose 100.1 points to hit a record intraday peak of 23,667.10 earlier in the day. However, it failed to maintain the momentum and slipped 65.90 points or 0.28 per cent to end at 23,501.10.

As per Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd., the outlook for the market will be guided by the major domestic and global economic data. India Infrastructure Output (YoY) (May), U.S GDP (QoQ) (Q1), Initial Jobless Claims, UK GDP (YoY), UK GDP (QoQ), Core PCE Price Index (YoY) (May) and Fed Monetary policy report will also impact the markets.

Further Nanda expects strong upward movements in Nifty to attract profit booking, making a sustained rally challenging. 

With a coalition government in place, Vinod Nair, Head of Research, at Geojit Financial Services believes there is optimism that the upcoming budget will strike a balance between growth initiatives and populist measures. Additionally, expectations are high for government actions aimed at stimulating consumption, a critical area to focus on. 

Nair added strong institutional inflows, including renewed interest from Foreign Institutional Investors (FII) post-government formation, have further bolstered market sentiment. However, profit booking emerged on concerns about the slow progress of the monsoon. Moreover, heatwaves in northern India remain a key concern. 

As per Nair, the outcome of the Goods and Services Tax (GST) meeting may also trigger sector-specific developments next week, as rationalisation of GST rates in some sectors, including textiles, fertilizers, and banking, is likely to be considered. Further, the discussion on the inclusion of petroleum products under the GST ambit is also a possibility.

Global markets outlook

On the global front last week, the market ended on a positive note with US and UK indices closing over 1.45 per cent at 39,150 and over 1.12 per cent at 8,237 respectively. 

"This week promises to be pivotal for global markets. Economic indicators from Australia, the US, and China will not only provide insights into current inflation trends and economic health but will also likely influence central bank policies and market sentiment" said Alex Volkov, Market Analyst at VT Markets.

Volkov added as always, staying tuned to these developments will be essential for traders and investors looking to navigate potential shifts in market dynamics.

Nair reckons the Bank of England opted to keep its interest rates unchanged led to a degree of disappointment. However, there is now an increased probability of a rate cut by August.  

Similarly, in the US, there was a rise in jobless claims, and weak housing data has raised expectations of a 67 per cent likelihood of a rate cut in September.

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