After falling 1.3%, or 270 points last week, the Bombay Stock Exchange benchmark Sensex may correct by a further 1.4-1.5% this week, with weak GDP numbers, auto sales figures and global cues likely to hit sentiments, analysts said.
However, a good monsoon may lighten the mood, and companies such as Reliance Industries Ltd and IT bellweather Infosys may provide silver linings.
The Sensex tumbled by 455 points, or 2.3%, to close at 19,760 on Friday, after decade-low GDP growth of 5% for 2012-13 spooked markets.
Experts see the index consolidating at 19,200-19,500, and the Nifty finding resistance at 5,850-5,900 level during the week.
A number of companies are set to initiate offers for sale (OFS) on Monday to meet the SEBI deadline to reduce promoter holdings. With a large chunk of funds being diverted to tap those shares, Sensex stocks may not see much action as OFS are issued by non-Sensex companies.
The Securities and Exchange Board of India (SEBI) has set a June 3 deadline to companies to reduce promotor holdings to 75%. Promoters of at least 9 firms, including Tata Comm and Essar Ports, would offer to sell shares worth over R700 crore on Monday.
Globally, weak US and European markets are likely to weigh on investor sentiments. “US and European markets are trading weak and this will affect the domestic market,” said Alex Mathews, research head, Geojit BNP Paribas Financial Services.
However, the US jobs data may move markets either way, said experts. While a decline in jobless numbers may signal improvement in the world’s largest economy and lift markets, it may also prompt the Federal Reserve to withdraw stimulus and thus dampen sentiments.
Among the Sensex stocks, Infosys, Sun Pharma and RIL are likely to be in focus this week, according to analysts.
While Narayana Murthy's return to Infosys as executive chairman is expected to lift Infy's stock, drug major Sun Pharma, which is in focus following reports of a multi-billion dollar acquisition, may see some correction as stock has already hit a high, Geojit's Mathews said.
Investors will also watch out for expansion plans to be rolled out at RIL's annual shareholders' meeting on Thursday.
The monsoon is also likely to be a key market mover. The fact that rains hit Kerala on Saturday as predicted is being considered a cue for normal monsoon - welcome news for the markets, especially for agri-related stocks such as fertiliser and tractor firms.