INDIAN EQUITY MARKET OUTLOOK - 06 JUNE 2016

Indian stocks Muted start likely as Bulls take some rest.

Indian shares are likely to see a mixed start as the global cues look subdued with SGX Nifty trading 1.50 points lower.

Indian Indices:

Indian equity benchmarks are likely to open on a mixed note on Monday as investors turn their attention to the RBI’s second bi-monthly policy meet tomorrow for its prognosis on Asia’s third biggest economy even though an interest rate cut remains highly unlikely as the central bank focuses on inflation control, liquidity management and the pending policy transmission after easing policy rates by a cumulative 150 basis points over the past 18 months.

The RBI, in its April 5, 2016 policy meeting had cut the repo rate by 25 basis points to 6.5 per cent. Aside from the RBI meet, investors this week will also eye the industrial production data for the month of April and the progress of the monsoon rains.

The country’s industrial output advanced 0.1 per cent, year on year in March 2016. Meanwhile, the Met Department has ruled out any possibility of a deficient monsoon this year with 96 per cent chances of a “normal to excess” rainfall.

Global Markets:

Asian stocks dropped on Monday after dismal US May jobs data raised concerns over a loss of momentum in the world’s biggest economy, souring risk taking appetite.

China’s Shanghai Composite fell amid jitters ahead of a raft of economic data this week; Hang Seng was trading lower while Japan’s Nikkei 225 plunged over 1 per cent as a stronger yen curbed the lure for exporter stocks.

Wall Street tread water on Friday after data showed that the US economy added the fewest jobs since September 2010 in May 2016 while services expanded at the slowest pace in more than two years last month, probably putting off an interest rate hike by the Fed in the near-term.

Employment in the US grew by 38,000 in May 2016 following a downwardly revised advance of 123,000 in April 2016. The ISM’s non-manufacturing gauge fell to 52.9 in May, the weakest since February 2014, from 55.7 in April, with a reading above 50 signaling expansion.

Major Headlines of the day:

·        Coal India board to discuss share buyback proposal

·        ICICI Bank plans to go paperless in green drive

·        OBC targets 12% credit growth in FY17.

Trend in FII flows:   The FIIs were net buyers of Rs 1585.01 Cr in the cash segment on Friday while the DIIs were net sellers of Rs -393.21 Cr, as per the provisional figures.

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