With many large events including the general elections and the Union Budget out of the market's way, the Nifty has been in a consolidation mode. With that, fear gauge the NSE India volatility index (VIX) also cooled down from its recent highs.
For most part of the week, the India VIX was down. And this complacency coincided with the slew of unimpressive macro-economic data. These included inflation, industrial production, trade data and purchase managers' index monthly survey. But as the week ended, the market started coming to terms with poor macro data, mixed earnings and subdued global cues. Finance minister Nirmala Sitharaman not providing any relief to foreign portfolio investors on the proposed surcharge also soured sentiment.
As a result, the Nifty shed 1.15% in this week and India VIX rose 4.31%. That said, on a calendar year-to-date basis, the India VIX is down 21.78%.
In the week ahead, the market's mood will depend largely on earnings performance of index heavy weights such as Hindustan Unilever Ltd, ICICI Bank, Tata Motors and Larsen & Toubro. Asian Paints, Bajaj Finance, Bajaj Auto are some other blue-chips that will announce their June quarter earnings in the coming week. In the wake of ongoing consumption slowdown, commentary by consumer-focused companies on demand will be closely watched by investors.
Apart from earnings, progress of monsoon will also be closely tracked.
Globally, besides the US-China trade negotiations, expectations of deeper interest rate cut by the US Federal Reserve are among the key cues. Investors will also monitor situation in the Middle East, after President Trump said a US Navy ship destroyed an Iranian drone in a defensive action in the Strait of Hormuz.
It should be noted that Nifty futures and options contract for the July series expires in the coming week. And the aforementioned factors are likely to keep volatility in Indian equities high.