Key Factors Shaping Dalal Street: US Jobs, PMI, Auto Sales, and Trade Deals in Focus

Dalal Street Weekly Outlook: Key Economic Triggers and Market Cues for the First Week of July

A Positive Outlook Amid Mixed Global Signals

Dalal Street concluded the week on a strong note, rebounding sharply and setting new highs for the year, as both geopolitical easing and robust institutional inflows supported the rally. As the new week commences from June 30, experts anticipate the bullish trend to continue, though minor phases of consolidation are likely.

Market Performance Snapshot

• The Nifty 50 surged by 2.09%, closing at 25,638, while the BSE Sensex jumped 2% to 84,059.
  • Nifty Midcap and Smallcap 100 outperformed, rising by 2.4% and 4.3%, respectively.
• The positive sentiment was largely fueled by declining oil prices, renewed FIIs buying, and hopes of a possible US Fed rate cut.

Major Events Impacting Markets

1. US-India Trade Deals and Global Tariff Developments
   • The spotlight remains on US trade deals with key partners as the July 9 deadline nears.
     • India is reportedly working towards a mini trade deal with the US, aiming for a breakthrough before the deadline.
   • In a notable move, China approved rare earth exports to the US, indicating some easing of restrictions.
     • However, China has issued a warning against US trade deals that could affect its interests, signaling potential geopolitical tensions ahead.
2. Fed Chair Speech and Key US Jobs Data
   • The market is awaiting Fed Chair Jerome Powell’s speech on July 1, which could provide further cues on interest rate direction.
     • Powell recently highlighted the impact of tariffs on inflation and hinted at the possibility of rate cuts if inflation remains subdued.
   • Critical US economic data, including unemployment rates, non-farm payrolls, vehicle sales, JOLTs job openings, and factory orders, will be released, with unemployment expected to hold steady at 4.2% for June.
3. Global Economic Indicators
   • Final manufacturing and services PMI data for June will be published by the US, China, UK, and Eurozone.
     • The UK will also announce Q1 2025 GDP growth figures.
4. Domestic Economic Releases
   • India will release industrial production and fiscal deficit numbers for May on June 30.
   • The crucial HSBC Manufacturing PMI (expected to rise to 58.4) and Services PMI (seen at 60.7) will follow on July 1 and July 3, respectively.
   • Updates on bank loan/deposit growth and forex reserves are also scheduled for July 4.

Institutional Flows and Market Sentiment

• FIIs emerged as net buyers, investing Rs 4,423 crore last week and Rs 8,320 crore in June overall, supported by improved risk appetite due to:
  • The Israel-Iran ceasefire
  • Falling oil prices
  • A weakening US dollar index (down 1.54% to 97.254)
• DIIs booked partial profits but remained strong buyers, with a monthly net inflow of Rs 69,176 crore.

Auto Sales in Focus

• Automobile companies will announce June sales in early July.
  • The outlook is mixed, with muted growth in passenger and commercial vehicles but stronger sales in two-wheelers and tractors due to rural demand and the ongoing wedding season.

Primary Market Buzz

• The IPO market remains active, with six new listings lined up next week, including Crizac from the mainboard and five SMEs.
  • Noteworthy mainboard debuts include Kalpataru, Ellenbarrie Industrial Gases, Globe Civil Projects, HDB Financial Services, and Sambhv Steel Tubes.
  • Several SME IPOs and 13 new listings are also scheduled, signaling investor enthusiasm in the broader market.

Technical and Derivatives Outlook

• The Nifty 50 formed a strong bullish candle on weekly charts, breaking out of a five-week consolidation phase.
  • MACD and RSI (at 64.58) remain supportive of a continued rally.
  • Key resistance is seen at the 25,750-25,800 zone; sustained close above this level could open up a move towards the 26,000 mark.
  • Strong support lies in the 25,200-25,300 range.

Derivatives and Volatility Analysis

• Options data suggests Nifty could trade within the 25,500-26,000 band in the coming week.
  • Maximum call open interest is at 26,500 and 26,000 strikes; put open interest is concentrated at 25,500 and 25,000.
• The India VIX volatility index dropped by 9.4% to 12.39, offering comfort for bulls as long as it remains below 15.

Additional Key Developments

• The above-average monsoon forecast continues to support sectoral trends, particularly for FMCG and agriculture-focused stocks.
• Progress on the US-India trade deal could provide further impetus if a breakthrough occurs before the July 9 deadline.
• Attention will also be on the beginning of the Q1 earnings season in the second week of July, as early corporate results set the tone for the market.

Conclusion

Dalal Street appears set for a constructive start to July, supported by favorable economic data, robust fund flows, and positive technical indicators. However, global trade developments, key US economic releases, and the trajectory of institutional flows will remain critical factors shaping market direction in the coming week.