In the holiday shortened week, the market valuation of six of the top-10 most valued firms went up by Rs 88,678.1 crore. The Market was driven by the latest military exchanges involving the US and Iran. This will continue to be the crucial space for the markets in the coming week too with focus on crude oil prices, supported by the key domestic macroeconomic data.
US Iran tensions:
The ongoing conflict will remain key focus area for the markets in the upcoming week. US has amplified the efforts to reopen the Strait of Hormuz without Iran’s direct oversight. Iran has twice attacked the vessels using a route on the Omani side.
Crude Oil Prices:
It will drive the crude oil prices which will be in focus for the investors after the prices have retreated to pre-conflict levels. Brent crude fell 1.4 percent to USD 72.7 a barrel last week.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said, “The crash in crude to below $ 73 is a huge positive for India. The Balance of Payments crisis which India has been facing, is now behind us. Therefore, it can be safely concluded that the period of relentless FPI selling is over. But it may take some time for FPIs to become sustained buyers in India.”
Foreign Investors selling:
Foreign investors remained the key seller during the last nine trading sessions from June 15 to June 25. FPIs were net buyers in the cash market on five occasions, though the purchases remained limited.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said, “A significant trend in FPI activity in the second half of this month is the tapering of FPI selling. During the last nine trading days from 15th June to 25th June FPIs were buyers in five days in the cash market even though the buying was in limited quantities. The big relentless FPI selling appears to be over.”
“There are two factors responsible for this shift in FPI activity. One, rupee has stabilised and even appreciated from the low of 96.96 to the dollar reached on May 15th. Now the rupee is about 94.40 to the dollar. It doesn’t make sense for FPIs to sell when rupee is appreciating. Two, the big volatility in the South Korean and Taiwanese markets are forcing the FPIs to sell in these markets. On one day the South Korean market crashed by 8% triggering freeze of trade. FPIs sitting on big profits have been selling in South Korea and Taiwan. This is persuading FIIs to again consider India despite its relative weak earnings.”
Rupee against Dollar:
Indian Rupee has stabilised against the US Dollar after touching a low of 96.96 on May 15. Rupee is currently trading around the 94.40 level.
