What in your view are the major cues for the coming week starting on 20th June 2022?

Here are some of the major cues for the coming week to watch out for in the stock markets.

· In terms of index performance, Nifty fell 6% during the week on the back of fears that the series of rate hikes by the Fed and the RBI could result in a slowdown in the markets overall, apart from spiking the cost of capital. However, this spread to smaller indices too as the Nifty mid-cap index fell -6.2% for the week and small cap fell -7.9%. Alpha is getting tougher to come by, both in large caps and in small caps.

· The coming week will be focused on specific sectors. Financials fell by over 7% during the week after the Fed hinted at more aggressive rate hikes going ahead. This is going to hit loan growth and also the bond portfolios of banks. FMCG and IT also fell more than 8% during the week. While FMCG was hit by demand uncertainty and squeezed margins, IT was hit by the prospects of weak IT spending by American corporations.

· The big word in the coming week is the R-word or the fear of recession. Currently, the Dow and the NASDAQ are already in bear territory while the Nifty is just about 1.5% away from getting into bear territory. In both cases, it is all about recession fears. The next few weeks could be crucial as high frequency data indications come through. One signal is oil falling 7% in the week on weak demand concerns.

· An important index to track in the coming week is the Dollar Index (DXY), which is at a 20-year high of 105.70. This is on the back of dollar strength, but the effect was also visible in the rupee value. The rupee spent most of the week beyond the 78/$ levels on the back of a strong dollar and rising trade deficit worries.

· Two of the most important variables that will be tracked in India this week will be the FPI trigger and the monsoon trigger. FPIs have sold Rs31,453 crore in equities in June till date compared to Rs45,276 crore in May 2022. That will put a lot of pressure. In addition, the monsoons have also been weak with the deficit at above 40% in the first half of June. The coming week, there are expectations of both improving slightly.

· The cues may be in the MPC minutes to be announced on Friday this week. It will give a heads up on the MPC thought process and the trajectory of repo rates going ahead. The current technical support levels for the Nifty are 15,360 and 14,900. That is also the put writing concentration and a lot will depend on whether these levels are breached.

· Finally, in global cues, the key US data points include Existing & new home sales, Powell Testimony, API crude stocks, jobless claims, PMI and current account from the US. Among ROW triggers this week, there will be focus on EU PMI, ECB Bulletin; Japan MPC minutes, PMI, Core CPI; China PBOC PLR; UK CPI, PPI, Industrial Orders.