FMCG and IT index to be under a cloud of on-demand concerns
- With worries of recession rising, there is worry about weak domestic consumer demand and weak IT spending
- The economic slowdown is the buzzword for the week across markets
- With DOW and NASDAQ in bear territory, Nifty is just 1% away from the bear territory as recession fears mount
- Oil prices fell by over 7% to $117 per bbl during the previous week
- Falling oil may be more due to fears of recession and weak global demand than to supply dynamics
The Nifty closed 6% lower for the week on rate hikes and recession fears
- Nifty closes -6% lower for the week on rate hike and recession fears
- Both the RBI and the Fed have hiked rates aggressively leading to higher cost of capital and hitting markets
- The Nifty mid-cap index fell -by 6.2% for the week and the small-cap fell -by 7.9%
- The big index to watch out for in the week will be Dollar Index (DXY)
- The Dollar Index touched a 20-year high of 105.70 showing that dollar strength will continue in the week
- Nifty 15,360 and 14,900 are key support levels to watch out for
Financials will be in focus this week after the risk of further hikes in rates
- Financials fell by over 7% during the week after the Fed hinted at more aggressive rate hikes going ahead.
- The rupee spent most of the week beyond the 78/$2 levels this week.
- A strong dollar index and a rising trade deficit are likely to keep the Indian rupee under a lot of pressure.
- FII selling will hold the key to the markets and is likely to be negative.
- For June 2022 to date, FPIs have already sold Rs31,453 crore in equities against Rs45,276 crore in May 2022
- This week could be crucial to see if these levels are breached since they have seen maximum Put writing OI
- The pressure spread even to smaller stocks during the week as there was selling across the board
On Friday, the MPC minutes are likely to be announced by the RBI
- It will give a clearer picture of the MPC thought process and the trajectory of repo rates going ahead
- Progress of the monsoons will be closely watched in the week
- The monsoon deficit was over 40% in the first half of June and this could impact Kharif output and food inflation
Key data points from US markets to be keenly watched this week
- Focus on Existing & new home sales, Powell Testimony, API crude stocks, jobless claims, PMI, current account
- Key data points from ROW markets to be keenly watched this week
- Focus on EU PMI, ECB Bulletin; Japan MPC minutes, PMI, Core CPI; China PBOC PLR; UK CPI, PPI, Industrial Orders