After the RBI lowered growth forecast for FY22 on June 4 (Friday) to 9.5 percent, headline indices ended lower with Nifty losing 20 points to end at 15670, while Sensex dropped 130 points to end at 52100. Broader markets however outshined with gains of over 0.70 percent on the Nifty Midcap 100.
Weekly performance to June 4, 2021
On a weekly basis, Indian indices gained for the third consecutive time, adding over 1 percent on strong domestic as well as global cues including continued decline in Covid positive cases, in line RBI policy statement and strong US non-farm payroll data.
During the week to June 4, 2021, Nifty notched a new high of 15,733.60 and even ended at a fresh lifetime high. Also, the broader markets including both Nifty mid cap 100 index and Nifty small cap 100 index logged fresh 52-week high.
Among Nifty sectoral gainers, Nifty PSU Bank gained the most by more than 18 percent, then followed Nifty Media and Nifty Metal up over 16 percent and 15 percent, respectively.
Volatility in the markets measured by India VIX continued to head lower and declined 8.4 percent to 15.94, i.e. the lowest level since February 2020.
Markets next week:
In the coming week, Indian markets will get direction from both domestic as well as global cues including quarterly results, monsoon situation, Covid 19 related updates.
Also, rupee's trajectory against the dollar and oil prices with Brent crude now inching close to $72 per barrel too will have a bearing on the Indian markets. Further the prime watch out shall be the US treasury yield as any spike in it shall result in outflow of FII funds from developing nations including India.
Charts if read in isolation do not signal any weakness in the market. Now what is important is that a continued period of low volatility is generally followed by highly volatile times. So, we may see markets either consolidating or there can be measured correction at higher levels.