Digesting the disappointing GDP data and buoyed by good Q4 earnings and timely onset of monsoon, markets extended gains for the fourth straight week.
Benchmark indices the Sensex and the Nifty closed 245 points and 58 points higher at 31,273 and 9,653 respectively. However, heightened activity in the mid- and the small-cap counters helped the BSE mid-cap and small-cap indices gain 1.9 per cent and 1.5 per cent. Outperformance would continue for some more time say punters.
It is pertinent to recall that RBI has held its benchmark repo rate at a six-year low of 6.25 per cent and raised its reverse repo rate by 25 basis points to 6 per cent in the last meeting saying there are upside risks to the inflation outlook amid an uncertain global economic environment.
With GST on the verge of implementation and visible impact of demonetisation reflected in GDP numbers, RBI may adopt status quo for present. Observers feel it may mostly consider rate cut in August policy. Markets would react to the decisions of GST Council and with the stage almost set for rollout of GST on July 1.
Near-term trend will be dictated by the RBI Policy meeting, progress of monsoon, the dollar-rupee exchange rate, investment pattern of FIIs, international crude oil prices and UK elections outcome.
Following Trump’s decision to withdraw from the Paris climate agreement, global market players fear unexpected “shocks” in coming days.
For the week ahead, chartists predict trading range of 30,800-31,700 and 9,500-9,775 for the indices. Key supports for the indices are at 31,000 & 30,750 and 9,575 & 9,500.
