SHARES could weaken on Monday and then trade in a range of around 200 points on the Nifty for the rest of the week, say brokers. The latest bad news from Europe, this time from Hungary, jolted world markets on Friday. US shares tumbled after the unemployment number for May was higher than market estimates. These developments will affect the sentiment for Indian shares, which have had a good run over the past few sessions.
Just when it seemed that the sovereign debt crisis in Greece was under control, the new government in Hungary said that its public finances were in a bad shape than estimated and that the country had only a slim chance of avoiding a debt crisis.
“Sentiment rather than fundamentals will drive share prices in the short term,” said Apurva Shah, vice-president & head-research, institutional equity, Prabhudas Lilladhar. “India is much better placed than most other economies, but its shares can not be immune to the turmoil in world markets,” he added.
Brokers expect foreign funds to persist with their selling-spree should the situation in Europe worsen. In May alone, foreign funds net-sold around Rs 9,700 crore.
Technical analysts expect the Nifty to face resistance in the 5150-5175 band, but don’t see the index falling below 4,800 in the near term. The meteorological department’s (Met) prediction of a normal monsoon and expectations of healthy corporate earnings for the current quarter will cushion the fall, market participants said. Benchmark indices will take cues from the Index of Industrial Production (IIP) due this week.
“We will see double-digit growth in manufacturing and the overall industrial growth is expected to be good, because of favourable base effect,” says Sujan Hajra, chief economist, Anand Rathi Financial Services. Investors expect shares of fast-moving consumer goods (FMCG) and pharmaceutical companies to be in demand, as these stocks are relatively steady in a volatile market.
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