Upward Momentum May Continue On Renewed FII Buying

We expect this upward momentum to continue, on the back of foreign institutional investors’ return to the Indian market amid attractive valuations and signs of economic recovery, said Siddhartha Khemka, head (research), Wealth Management, Motilal Oswal Financial Services Ltd

New Delhi: Global trends, tariff-related updates and trading activity of foreign investors would be the key drivers for the equity market movement this week, analysts said. Markets witnessed a strong rebound last week, with the benchmark indices surging over four per cent. The rally was fuelled by improving investor sentiment, improvement in foreign capital flows, and positive global developments, an expert said.

“We expect this upward momentum to continue, on the back of foreign institutional investors’ return to the Indian market amid attractive valuations and signs of economic recovery,” said Siddhartha Khemka, head (research), Wealth Management, Motilal Oswal Financial Services Ltd.

Investors would also track the rupee-dollar trend and movement in global oil benchmark Brent crude, an analyst noted.

“With no major domestic economic events scheduled, focus will remain on the expiry of March derivatives contracts and FII activity. On the global front, the US markets will be closely watched, with tariff-related updates and GDP growth data expected to influence investor sentiment.

Several domestic and global factors such as PMI, FIIs, Indian banks loan and deposit growth, the US new home sales, US Initial Jobless Claims and the UK GDP data for Q4 will guide the market direction this week, observe analysts.

“Although US markets saw a temporary respite after a sharp decline, mixed signals suggest potential volatility in the coming sessions,” Ajit Mishra, Sr V-P (research), Religare Broking Ltd, said.

India’s Composite PMI Preliminary data for March is to be released on Monday and will be crucial for driving market sentiment. In India, Composite output refers to a weighted average of the Manufacturing Output Index and the Services Business Activity Index.

The India Bank Loan Growth and India Deposit Growth data will be released by the Reserve Bank of India (RBI) on Friday.

On the global level, the US New Home Sales MoM for February is set to be released on Tuesday and the UK GDP data for Q4 is scheduled for release on Friday.

Additionally, the US Initial Jobless Claims and US Corporate Profits (QoQ) data for Q4 will also be released.

Last week, the BSE benchmark gauge surged 3,076.6 points or 4.16 per cent, and the Nifty jumped 953.2 points or 4.25 per cent.

“The domestic market has concluded the week with consistent recovery. The anticipated reduction in risk-free rates, coupled with the correction in the dollar index, are facilitating fund flows back to EMs. FIIs, whose selling activity has been waning, are becoming net buyers, driven by dovish signals from the US Fed, which suggest the possibility of two rate cuts this year. This has reignited optimism in the domestic market,” Vinod Nair, head (research), Geojit Financial Services, said.