This week, the Indian stock market is expected to take its cues from global market trends and the activities of foreign institutional investors (FIIs), as no significant domestic events are on the horizon. With the settlement of monthly derivative contracts, experts predict some volatility in market movements. Analysts suggest that last week’s Federal Reserve interest rate cut of 0.50% has set the stage for increased foreign investment, particularly in emerging markets like India.
Strong FII Inflows Driving Market Surge
Last week, FIIs made significant investments in the Indian markets, further boosting the already strong performance. On Friday alone, FIIs poured in ₹14,000 crores. According to Santosh Meena, Head of Research at Swastika Investmart Ltd, the US interest rate cuts have historically had a positive impact on emerging markets, with India standing out as a favored destination for foreign investors.
Meena noted that despite no major domestic indicators being in play, the US macroeconomic data will be crucial in shaping market sentiment this week. He also added that while the market currently seems unaffected by geopolitical risks, such factors could pose threats to market stability in the future.
Sensex and Nifty Reach Record Highs
The Indian stock market finished last week on a high note, with the BSE Sensex closing at a record 84,544.31 points, up 1.63% or 1,359.51 points. During Friday’s trading, the Sensex climbed even higher, reaching an all-time high of 84,694.46 points with a gain of 1.81%. Similarly, the Nifty 50 closed at a record 25,790.95 points, gaining 1.48% or 375.15 points. The Nifty also touched a new high during the day’s trade, reaching 25,849.25 points, up 1.70% or 433.45 points.
For the week, the Sensex surged by 1.99% (or 1,653.37 points), while the Nifty gained 1.71% (or 434.45 points). Both indices continue to reflect the positive momentum driven by foreign investment and a favorable domestic macroeconomic environment.
Market Outlook: What Experts Predict
According to Siddharth Khemka, Head of Research at Motilal Oswal Financial Services, the market is moving upwards gradually. He expects this positive momentum to continue, driven by strong FII inflows and healthy domestic macroeconomic indicators. He also noted that diminishing concerns about a slowdown in the US economy are contributing to the market’s stability.
Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, stated that while the impact of the Federal Reserve’s interest rate cuts has already been felt, the market’s future direction will largely depend on further developments in the US economy. He added that investors will be closely watching for movements in crude oil prices and foreign fund inflows to gauge the market’s trajectory.
Key Factors to Watch This Week
Several key factors will influence the market’s movement in the coming days:
- US GDP Data: Investors globally will be focused on the US GDP growth numbers for the June 2024 quarter. Federal Reserve Chairman Jerome Powell’s speech on September 26 will also be closely watched for guidance on further interest rate cuts, economic growth, and labor market trends.
- Global Economic Data: Other global economic indicators, such as the PCE price index, durable goods orders, personal income and spending data, and the new home sales data for August, will also play a significant role in shaping investor sentiment.
- Domestic Economic Data: On the domestic front, India’s HSBC Manufacturing and Services PMI data, to be released on September 23, will be a key focus. Additionally, the foreign exchange reserves data for the week ending September 20 will be released on September 27.
Rising Crude Oil Prices and Global Tensions
Crude oil prices have surged in recent weeks, partly due to rising tensions in the Middle East. International benchmark Brent crude futures increased by 4.02% last week, closing at $74.49 per barrel. Analysts predict that geopolitical risks may limit any major decline in oil prices, as ongoing conflicts and heightened tensions continue to influence the market.
IPO Market and New Listings
The primary market will see plenty of action this week with the launch of 11 new IPOs, including 2 mainboard offerings. Additionally, 14 companies are set to list on the stock exchanges, including Western Carriers (India), Arkade Developers, and Northern Arc Capital. These listings will offer investors fresh opportunities in the week starting from September 23.
