A short but volatile week ahead

Mumbai: Key macroeconomic data, relief measures expected from the government and the last leg of the earnings season will be the key themes that market will be tracking during the week.

The stock market will be closed on Monday and Thursday for Bakri Id and Independence Day celebrations, and hence domestic markets would most likely take cues from the global markets on Tuesday.

The market is waiting for the government to provide some relief on FPI surcharge and stimulus for auto sectors, analysts said.

The US market's negative close on Friday may weigh on the Asian markets on Monday morning. On Friday, US tech Index Nasdaq fell 1 per cent while S&P 500 fell 0.66 per cent and Dow Jones Industrial Average too was down 0.34 per cent.

The bounce back seen last week after the indices hit five-month lows is likely to keep volatility high in the short-term.

Crude oil price meanwhile remains supportive for the Indian market as Brent crude oil futures on Friday closed around $58.42 per barrel.

Foreign portfolio investors have sold equities worth Rs 11,135 crore in August month so far, the second highest in this calendar year after the July sell-off. However, towards the close of the week, the FPI selling had slowed down in anticipation of a roll back of the super-rich tax applicable on them.

Reports said the government may announce relief measures for the economy in general in the next 7-10 days and may cover auto sector and the financial markets.

SBIcap Securities said, "The markets, after five consecutive weekly declines, managed to close in a positive territory on the back of strong global cues and speculation of much needed relief on FPI surcharge. Yet, FPIs continued to offload stocks to the tune of over one billion US dollar while domestic institutions have provided continuous & unabated buying support to the tune of Rs 5,600 crore.

Ajit Mishra, Vice President—Research, Religare Broking, said, "The coming week is a holiday-shortened one and participants will be eyeing some of important macroeconomic data. CPI Inflation and WPI inflation are scheduled on August 13 and 14, respectively. Besides, the data on balance of trade is also scheduled on August 14."

In the last week of the earnings season, NTPC, Sun Pharmaceutical and Indraprastha Gas will announce their numbers along with several others.

The broader market could regain momentum in coming days. Shrikant Chouhan, Head- Technical Resear-ch, Kotak Securities, said, "On a weekly basis, many blue-chip mid-cap stocks closed higher with substantial gains, which is an indication that inflows have begun in mid-cap stocks."

On the global front, the US-China trade war remains a big concern, though China has relented on currency devaluation, it retaliated to US actions in the past.

With monsoon rains turning out to be almost normal for most parts of India, the market is likely to cheer the news. Rain falls are 2.5 per cent less than the normal against the forecast in the beginning of El Nino phenomenon impacting early rains. The deficit has now been made up with surplus rainfall in July-August so far.