Sensex, Nifty 50 break 3-month gains to end May in red; 5 major triggers to watch out for in June

Market experts anticipate high volatility in June due to Lok Sabha Election results, Budget speculations, geopolitical tensions, central bank meetings, and the progress of the monsoon.

Nishant Kumar
Updated1 Jun 2024, 09:59 AM IST
Indian stock market benchmarks, the Sensex and the Nifty 50 closed in the red in May. Photo: HT
Indian stock market benchmarks, the Sensex and the Nifty 50 closed in the red in May. Photo: HT(HT)

Swinging between gains and losses, Indian stock market benchmarks, the Sensex and the Nifty 50, eventually ended the month of May with losses, snapping the winning streak of the last three consecutive months.

Sensex shed 0.70 per cent, while the Nifty 50 declined 0.33 per cent in May. The BSE Midcap index, on the other hand, bucked the trend and clocked a decent gain of 1.74 per cent. The BSE Smallcap index lost 0.11 per cent in May.

The domestic market witnessed strong volatility, with the fear index India VIX surging 91 per cent in May. Volatility may spike further in June as several crucial events will swing the market in the coming month.

Also Read: Lok Sabha Elections 2024 trading strategy: Is Nifty 50 set to scale new heights after poll results?

Here are the five key factors set to influence the Indian stock market in June:

1. The Lok Sabha Election result

All eyes are on the results of the Lok Sabha election 2024, which is expected on June 4. Exit polls will start coming after the final phase of the seven-phase general election on Saturday, June 1. Experts anticipate high volatility in the Indian stock market on Monday and Tuesday, reacting to exit polls and the final outcome.

"The Indian Lok Sabha results on June 4th will be the year's biggest event. Depending on the results, it could kickstart a rally or create market volatility," said Ankur Punj, Managing Director and National Head at Equirus Wealth.

Also Read: BJP-led NDA likely to win Lok Sabha election 2024, says Phillip Capital, recommends over 50 stocks to buy

2. Buzz about the Budget

After the formation of the new government, focus will shift to the new Budget which will most likely be presented in July. The speculations around the Budget will keep the market busy in June.

"After elections, the next major trigger for the market will be the Budget. Growth-oriented measures will support the market momentum positively," said G. Chokkalingam, founder and head of research at Equinomics Research Private Ltd.

Also Read: Lok Sabha Elections 2024 Trading Strategy: Analysts predict Nifty to shine above 23,000; Here's how to trade on June 4

3. Geopolitical developments

Geopolitical developments will remain critical triggers for market sentiment. If tensions in West Asia escalate further, it may deal a blow to investors' risk appetite. Moreover, tensions in West Asia can push crude oil prices higher, which is negative for the Indian economy and can weigh on market sentiment.

"Downside risk could stem from geopolitical tensions like the Hamas-Gaza and Russia-Ukraine War," Punj said.

4. Central bank meetings

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will meet on June 5-7 to decide on the monetary policy. The US Federal Reserve will announce its policy decision on June 12. Even though neither the US Fed nor the RBI is expected to cut rates, investors' focus will be on the commentary of central bank chiefs regarding the growth and inflation dynamics.

"The RBI and Fed’s interest rate decisions are important. The Fed meeting will happen on 11- 12 June, whereas the RBI decision will occur in the first week," said Punj.

5. Progress of monsoon

The monsoon is expected to remain above normal this year. According to the India Meteorological Department (IMD), southwest monsoon rainfall over the country from June to September is likely to be 106 per cent of the long-period average, with a model error of +/-4 per cent.

Also Read: Monsoon reaches Kerala two days ahead of schedule

Monsoons are critical for the Indian economy as the nation's agri sector depends significantly on rains. The majority of India's rural population is employed in the agriculture sector, which contributes a big part to the growth of the country's GDP. Moreover, the monsoon affects inflation and influences policy decisions.

Also Read: What sectors will benefit from monsoon 2024?

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.

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First Published:1 Jun 2024, 09:59 AM IST
HomeMarketsStock MarketsSensex, Nifty 50 break 3-month gains to end May in red; 5 major triggers to watch out for in June

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