Moneycontrol Bureau
Last week overall the market was range-bound amid a slew of events. Closer at home, the Cabinet cleared the aviation policy & merger of five associate banks with SBI; retail inflation in May increased to 5.76 percent; RBI rolled out a new scheme for stressed assets; HDFC and Max Group both decided to merge their insurance businesses. Globally, the Bank of Japan kept its policy unchanged and the US Federal Reserve policy meet was a non-event. It held fire even as it lowered the FY16 and FY17 growth forecasts to 2 percent from 2.2 percent & 2.1 percent, respectively.
Volatility is likely to stay as the new week gets ready for Britain's referendum vote on Thursday that will decide whether the country will remain a part of European Union.
The majority of market experts believe that the UK will remain in European Union (especially after Britain's Labour MP Jo Cox death). Though no one can predict the outcome of the referendum, some are still expecting (infact even supporting) the UK to leave the 28-member Union.
Overall, the Nifty is likely to be in the range of 8050-8250 levels next week but post the referendum, the direction can be either way, feel experts.
They expect a sharp correction not only in India but also globally if the British vote in favour of an exit while if Britain stays in EU then there can be sharp rally with the Nifty possibly rising above 8300.
"A vote to exit from the EU will have an immediate negative effect on both euro and pound currencies. Inflation can increase in Britain in the near-term, real estate prices may correct, capital outflow will start and unemployment can increase in future," says Nirdosh Gaur of Moneypalm.
On India, he says British exit will impact capital flows and exports to Europe will also get affected due to euro and pound devaluation. "Indian business houses have a material presence in both the UK and Europe and they will get substantial impact due to unavoidable currency fluctuations. Companies like Tata Motors, Tata Steel, Hindalco and pharma majors will also get impacted due to any major currency fluctuations," he adds.
Andrew Holland of Ambit Investment Advisors feels the market can fall 10 percent if Brexit does take place.
After Britain's event, Holland feels the Indian market can reclaim previous highs in the medium-term on hopes of further improvement in earnings, above-normal monsoon and passage of Goods and Services Tax (GST) Bill.
The primary market will also be in focus next week as Mahanagar Gas, which has city gas distribution business, will open its Rs 1000-crore initial share for subscription on Tuesday. Price band is Rs 380-421 a share. Therefore, all eyes are on its peers GAIL and Indraprastha Gas as well.Posted by Sunil Shankar Matkar
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
