InvestorQ : What will be the important trading cues for the coming week in the Indian stock markets? How to position for trading and investment?
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What will be the important trading cues for the coming week in the Indian stock markets? How to position for trading and investment?

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2 years ago
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The coming week will be interesting as the new government led by Narendra Modi will take charge and a new cabinet will be formed. The mix of cabinet members, especially of key portfolios like Finance, Commerce, Oil and Industry will be key inputs for the stock markets. Here are some of the key factors that will have an impact on trading and investment in the coming week.

a) All eyes will be on May 30 when the Modi government formally takes of office and the new cabinet is announced. The markets will be keen to know the names of the Finance Minister, Oil Minister, Commerce and Industry ministers as they will be the key to the continuation of the reforms process.

b) With the fake invoice arrests of the top brass of Manpasand, the focus will be back on companies with dubious corporate governance practices in the past. These companies could react negatively on Monday.

c) Most NBFCs will find the weight of the new liquidity norms for NBFCs. RBI has announced the maintenance of liquidity coverage ratio (LCR) and that will add to the costs of NBFCs. These NBFC stocks may be in the focus once again.

d) Progress of the global trade war and the US dealing with Huawei will be closely watched. Markets will be hoping for a speedy resolution to the trade war crisis as the fears of an economic slowdown are gradually picking up.

e) Don’t miss out on oil prices. Oil prices fell sharply last week on the back of US stockpiles and fears of a prolonged trade war. Any sharp rise in oil prices will not be good news for India and the markets will prefer to see Brent Crude below the $70/bbl level.

f) The situation in the Middle East appears to be getting more delicate with the US despatching another troop of 1500 to the Middle East. With Iran sticking to its guns, the situation could have an impact on global markets and the price of oil.

g) The volatility index (VIX) has fallen sharp last week after the election outcome from a high of 30.18 to a level of 16.55. That should keep the Nifty less volatile during the week compare to the last few weeks.

h) More than 1000 companies will declare their fourth quarter results for the March quarter as it is mandatory to declare by 31st of May. Some of the popular names that will declare results include Zee Entertainment, GAIL, Aurobindo Pharma, PNB, Sun Pharma, Adani Ports SEZ, BHEL, Indigo Airlines, Motherson Sumi, Coal India, SAIL etc.

i) Auto sales will be released later this week for May and that will be a critical input for auto stocks, which have been under pressure for the last few months on the back weak growth numbers.

j) Among the very important data points, the GDP data for the March quarter and the full year GDP data will be declared on 31st of May. This could set the tone for most capital goods companies.

k) FII numbers will be crucial. During the week post the exit polls, FIIs were aggressively buying into Indian equities. It remains to be seen if this rally can be sustained or not.

l) The other macro cues to watch will include the Core Sector Numbers and the PMI Manufacturing which can be expected this week.

The big factor driving the markets this will week would be the pronouncements of the new government. That will be the key!
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