Global trends and inflation driving market sentiments

Equity investors will be closely monitoring global market trends, inflation data, and foreign investors’ activities this week. Analysts are of the view that developments in the monsoon progress and trade talks will also play a crucial role in guiding investor sentiment.

Key macroeconomic data, especially high-frequency indicators like CPI inflation, will be under scrutiny to assess demand patterns and anticipate the central bank’s next moves. Ajit Mishra, the Senior Vice President of Research at Religare Broking Ltd, emphasized the importance of keeping an eye on factors such as monsoon progress and sowing trends due to their impact on rural consumption trends.

Furthermore, global trade negotiations and fluctuations in US bond yields will continue to sway investor sentiment. It is expected that ongoing discussions in trade negotiations and movements in bond yields will significantly influence market movements in the coming days.

The recent surge in benchmark indices, including the Sensex and Nifty, was predominantly driven by a rally in rate-sensitive sectors following a substantial 50 basis points rate cut by the Reserve Bank. The BSE Sensex closed higher by 746.95 points, settling at 82,188.99, while the NSE Nifty surpassed the 25,000-mark and climbed 252.15 points to close at 25,003.05.

Siddhartha Khemka, the Head of Research at Wealth Management at Motilal Oswal Financial Services Ltd, expressed optimism about the Indian market’s gradual upward movement following the RBI’s rate cut and the potential US-India trade agreement. He stressed that the recent positive sentiment is fueled by higher-than-expected rate cuts by the RBI and positive expectations regarding an imminent US-India trade deal.

Despite these optimistic projections, global uncertainties, such as unexpected shifts in US tariffs and ongoing geopolitical tensions, may introduce volatility into the market. However, investors remain cautiously optimistic given the supportive factors such as the aggressive rate cut by the RBI against a backdrop of easing inflation and a stable GDP outlook.

In the past week, the BSE benchmark witnessed a significant surge of 737.98 points, while the Nifty recorded a jump of 252.35 points. Vinod Nair, the Head of Research at Geojit Investments Ltd, highlighted that the assertive rate cut by the RBI, coupled with a cooling inflation environment and a steady GDP outlook, is likely to enhance investor confidence amidst the prevailing global uncertainties.

Foreign Institutional Investors (FIIs) showed optimism in the market by purchasing equities worth Rs 1,009.71 crore on Friday, as reported by exchange data.