Markets week ahead: Rally likely to gain momentum

India’s benchmark indices have succeeded in adding 600 points every week in the last fortnight as the government unveiled the plan of unlocking the lockdown imposed in the country since March 24.

Global optimism as well as perky investor sentiments played their part in providing momentum.

The index pulled back from the low point and finished on a strong note in last three session.

This helped Nifty end the week with a strong gain of 342 points, or 3.5%, on a weekly basis.

Locally, the economy will start reopening in the week starting from Jun 8, which should be positive for markets.

Standoff with China continues in the Himalayas and non-bank financial woes continue to impact sentiment. No significant data.

The week ahead will focus the Fed’s upcoming rate decision and reopening momentum across the globe.

Investors will get a chance next week to see whether the US Federal Reserve agrees with their optimism.

The US central bank’s two-day meeting, ending on Wednesday, will be the first since April when Fed Chair Jerome Powell said the US economy could feel the weight of the economic shutdown for more than a year.

There are expectations that the Fed could introduce additional bond-buying programs known as quantitative easing or yield-curve control measures to target short-term rates, which will lead to a significant rise in yields.

They will await for the central bank assessment on Coronavirus progress as to whether the worst part of the crisis has passed.

Two highly coveted reports will also be released by the World Bank and the OECD, which will only represent their best guess on how the global economic recovery will turn out.

Investors will also pay attention to the euro-area finance ministers’ next round of talks with the EU’s recovery package and the Eurogroup presidency succession. 

US-China trade tensions will also remain a focal point as both sides continue to exchange jabs.

After much back and forth, it seems OPEC + is poised to meet over the weekend to finalize a production cut extension deal.

Net net markets are likely to remain in positive territory in coming week with stock specific activity seen where earnings ate expected in coming week. The Best term mood of the market could change only if we have a index close below 10000 level which is key near term support as of now.

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