InvestorQ : What are the major cues for the stock markets for the last trading week of June 2019?
Rutuja Nigam made post

What are the major cues for the stock markets for the last trading week of June 2019?

Arti Chavan answered.
3 years ago

The previous week was an action-packed week with the US Fed announcing a status quo on rates and Iran shooting down a US drone. The Indian markets remained highly volatile during the week as crude oil prices spurted after the rising tensions in the Middle East. Here are some of the key cues for the coming week.

· Geopolitical tensions will be the key factor to watch out for in the Middle East. After Iran had shot down a US drone over Iranian airspace (as claimed by Iran), the US had threatened to launch counter strikes on Iran. Although the plan to launch counter strikes was withdrawn in the last minute, the situation in the Middle East continues to remain tense.

· With just one week to go for the Union Budget after the forthcoming week, the focus of the week will shift to budget expectations. Stocks in the consumption space, agri stocks and infrastructure stocks could be in the picture as these are the sectors that are likely to benefit from the budgetary announcements. Also keep an eye on auto companies that already an Electric Vehicle franchise.

· Keep an eye on the price of gold in the international market. Gold has shot up smartly in the last few weeks and normally gold prices are inversely related to stock prices. Rise in gold prices indicate higher geopolitical and economic risk in the markets and any rise in gold prices could be negative for equities.

· There are more companies that are getting caught up in the debt crisis. After Jet Airways, Dewan Housing and Indiabulls, it is now companies like Jain Irrigation where questions are being raised on solvency. Also, keep an eye on stocks like Yes Bank and IndusInd Bank where asset stress is visible. These could be in the limelight. 

The G-20 Summit will take place in Osaka, Japan on June 28thand 29th. 
The most important feature from the market perspective will be the meeting between Donald Trump and Xi Jinping to resolve the trade war situation. Any positive move on that front will be positive for equities.

· With rising tensions in the Middle East, crude oil cannot be too far as a factor. Last week, Brent Crude had gained nearly 10% due to rising tensions. Of course, the boost to oil prices will come if there is a positive outcome in the meeting between Trump and Xi in the midst of the G-20 Summit.

· Watch out for some important macro data that will be announced this week. The current account deficit and the external debt numbers for the March quarter and for the full year will be announced on June 28th and will be a key input for the rupee value. Also keep an eye on the foreign exchange data over the week end.

· Finally, expect the routine volatility around the F&O expiry during the week. Rollovers could improve and you could also see some of the futures on beleaguered stocks seeing short covering in the market.

Overall, it is likely to be a volatile week with the levels of 12,000 for the Nifty and 40,000 for the Sensex continuing to be major resistance.