Market Outlook: Inflation figures, industrial growth to induce volatility - What investors should know

Stormy weather awaits India`s key equity indices, as volatility is bound to flare-up on concerns regarding a delayed Monsoon and upcoming macro-economic data points on industrial production and inflation. Additionally, liquidity crisis in the NBFC sector will continue to pose as another risk factor for the market.

"Investor confidence has again been shaken by signs that the crisis is spreading in the NBFC sector and mutual funds," said D.K. Aggarwal, Chairman and Managing Director, SMC Investments & Advisors. "Going forward, markets will also closely watch inflation data, which is due next week, and development of Monsoon amid other global factors such as trade war and US Fed`s meeting outcome, which is scheduled next week."

The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI (Consumer Price Index) from June 12. Subsequently, other major macro-economic data points such as WPI (Wholesale Price Index), Current Account Deficit and Balance of Trade figures will be released.

"Going ahead market is expected to trade based on key macro data like inflation and Industrial production. Inflation is expected to be slightly on the higher side based on rise in food prices but to remain under the range provided by RBI," Vinod Nair, Research Head, Geojit Financial Services, told IANS.

"Industrial growth (IIP) is expected to show some slight growth. How monsoon pans out will also be in focus as the latest estimates provided by IMD indicate monsoon will arrive late." On the global front, monetary policy announcements by the US Federal Reserve will form the other major theme for the upcoming week.

"Market is expected to be volatile and given the limited headroom in valuation, we do not anticipate big growth in main indices. Now markets will turn their focus on to upcoming budget and hopes will start kick in for reforms from the government to accelerate and increase private investment," Nair said. 

"On the global front the progress regarding US-Mexico-China trade war concerns and movement of crude oil prices ahead of OPEC meeting scheduled end of this month will remain in focus." In terms of currency, the Indian rupee last week weakened by 20 paise to close at 69.48 against the US dollar from its previous week`s close of 69.68 per greenback.

"Expect the rupee to trade between 69.30 to 70.10 in coming week with a weak bias...," said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities. On technical charts, the NSE Nifty50 remains in an intermediate uptrend.

"Technically, the Nifty remains in an intermediate uptrend and traders will need to watch if the index can now hold above the immediate support of 11,769 points for the uptrend to sustain in the coming week," said Deepak Jasani, Head of Retail Research, HDFC Securities.