All eyes are on the key levels to watch out for on Nifty as the equity markets get set for another week of trade. The investors are going to watch out for developments and announcements from the US Federal Reserve, its decision on interest rate, FII activity and corporate earnings.
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, forecasted that the market would likely consolidate with a positive bias, with stock-specific action dominating the market. He also cautioned that some volatility could occur due to geopolitical tensions.
US-India trade talks, FII buying crucial triggers
Optimism surrounding potential trade agreements with the US is keeping sentiment buoyant. Sustained inflows from Foreign Institutional Investors (FIIs) have also helped markets maintain momentum.
FIIs have been sustained buyers over the last 12 trading days, signaling a shift in their strategy. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out that the reversal in FII strategy can be attributed to President Trump’s 90-day pause in reciprocal tariffs, which led to a recovery in global equity markets. Additionally, the decline in the US dollar has fueled FII inflows into emerging markets, particularly India.
Growing India-Pakistan tension may keep investors on edge
However, the geopolitical tensions between India and Pakistan following the Pahalgam terror attack may keep investors on edge and the gains limited.
Ajit Mishra, Senior Vice President of Research at Religare Broking, stated, “This week is crucial, packed with key domestic and global triggers. Developments regarding tariff and geopolitical tensions with Pakistan will remain on the radar. On the macroeconomic front, investors would be eyeing the HSBC composite PMI and services PMI data. Globally, the Fed’s interest rate decision is due on 7th May.”
Q4 earnings watch
The Q4 earnings so far have been more or less inline with estimates and corporate earnings will continue to be a key focus area this week too. Major companies such as M&M, Coal India, Asian Paints, Larsen & Toubro, and Titan are set to release their quarterly results.
Meanwhile, the State Bank of India (SBI) reported an 8.34% decline in its consolidated net profit for the January-March quarter, amounting to Rs 19,600 crore, impacted by a drop in net interest margins.
Last week, the BSE benchmark surged by 1,289.46 points, or 1.62%, while the NSE Nifty climbed 307.35 points, or 1.27%. Despite this, concerns over a potential US recession and the ongoing India-Pakistan border tensions have created uncertainty in the market. Gaurav Garg, Analyst at Lemonn Markets Desk, stated, “Domestic markets are expected to remain cautious in the near term amid ongoing geopolitical tensions, although a sharp correction is not currently anticipated.”
Global worries
On the global front, easing trade tensions between the US and China, coupled with a weakening US dollar, have been viewed as positive factors for emerging markets like India. However, the recent decline in the US GDP growth for Q1 has added a layer of uncertainty. Vinod Nair, Head of Research at Geojit Investments, remarked, “Upcoming comments from the Federal Reserve Chair on interest rates and inflation during this week’s FOMC meeting will be closely watched and could significantly influence market direction.”
As the market enters this pivotal week, all eyes will be on the global developments, corporate results, and domestic factors that could shape the future direction of the equity market.
(With PTI inputs)