Charging bulls may take a pause

Nifty may find support in 9500-9800 after breaching 9532, and closing at an all-time high of 9595

Updated : May 29, 2017, 07:30 AM IST

The markets appear to be headed higher this week primarily because the result season is almost over. The second reason is that main indices both here in India and the US have broken out of a rut and are eager to move higher.

However, we believe two important data points – the non-farm payrolls data in the US and the GST rates for gold, gold jewellery, apparels and textiles will be known only after our markets down their shutters for the week. So these will become the trigger for the next week.

So for the current week the markets are likely to consolidate with an upward bias.

The Nifty has pierced the upper range of 9532 and closed at 9595, an all-time high. Similar is the story with the Sensex and the Bank Nifty. We see a range of 9500-9800 for the Nifty in the current series.

This is a holiday shortened week for the U.S, UK and Chinese markets. The U.S. markets are closed for Memorial Day holiday on Monday. The London Stock Exchange is closed Monday for the Spring Bank Holiday. The Chinese markets are closed Monday and Tuesday for the Dragon Boat Festival.

While 41 companies of the Nifty have reported their quarterly numbers, the balance nine would do on Monday and Tuesday.

The markets are likely to spend Monday and Tuesday studying these results and twiddling their thumbs as there will no worthwhile international trend supporting the markets.

From Wednesday onwards, it will be the domestic and global economic data that will be at play throughout the week. Wednesday will see release of manufacturing data for Japan, Europe and the US. Our GDP data for the year 2016-17 would also be reported. It is likely to come in 7.10%.

The all-important non-farm pay rolls data will be released in the US on Friday. The number of new jobs created in the month of May are likely to come at 180,000 as against 2,100,000 for April.

Finally there is another factor that will be at play. And that is the progress of the monsoon. There are plenty of agencies ranging from Australia in the east to US in the west who could impact our markets with their views on monsoon precipitation.

While crude may move a bit higher from the current levels, it is unlikely to be a disruptive force, despite the Organization of the Petroleum Exporting Countries and Russia agreeing to extend their 1.8 million barrels a day cuts by nine months to March 2018.

On the negative side, the US markets had more or less forgotten Trump's Russian scandal as he was abroad. Now that he returns to the US his troubles too could return.

However, we believe, India is a market whose time has come. Trump's trouble may hamper US but not India. Best days are ahead of us, not behind.

...& ANALYSIS

Markets are likely to spend the early part of the week studying quaterly results of companies
Midweek, economic data will be at play since manufacturing data for US, Europe, Japan will release
India is a market whose time has come.Trump’s trouble may hamper the US but not India

The writer is head – private client group, HDFC Securities