Macro data set to guide Indian stock markets

When Prime Minister Narendra Modi met with President Donald Trump, recently following Trump's comeback to power, they pledged to enhance United States and India trade relations, setting an audacious goal of $500 billion by 2030. Their negotiation teams have also been directed to try and achieve a deal by Fall 2025 (September-December 2025). The terms of this deal are likely to reduce tariffs and other barriers on textiles, electronics, engineering and other industries. And the recent fluctuations in the Indian market have been caused by this Modi- Trump economic talks.

Moreover, India also pledged to increase energy purchases from the United States, which will increase India's spending on oil and gas from $15 billion to $25 billion, thus reducing trade deficit between two countries.

US President Trump made the announcement of his ‘new reciprocal’ tariff plan, where he applies the same duties onto other high tariff countries. While self-benefiting trade practices were set in place, this policy has introduced short-term uncertainty into the Indian stock markets.

There are many more factors that are in the waiting, which one will have to keep a close watch on.

The upcoming week is set to be dynamic for global and Indian markets, driven by key macroeconomic data releases and corporate earnings. Market sentiment will be shaped by data related to GDP, housing data, inflation, infrastructure and others.

For instance, on Thursday, February 27, the US GDP Growth Rate (QoQ) Second Estimates for Q4 will be released, providing insights for the expected growth rate of US. The US initial jobless claims data will also be released.

Looking at India, India’s Infrastructure output for January is to be released on Friday, February 28, which will be of great importance. In India, infrastructure output refers to a combined index that measures the performance of Eight Core Industries.

On the same day, in the evening, Second Advance Estimates of India’s Annual GDP for FY25 along with Quarterly GDP estimates for Q3 (Oct-Dec) will be released. The estimates will guide near-term market sentiment, upward revisions may lift optimism while downward tweaks could spur caution overgrowth headwinds.

Besides, the release of the US PCE and US Core PCE will be of great significance. The US PCE inflation data influences Fed policy expectations, affecting global liquidity and capital flows into Indian markets too.

Indian equity benchmarks extended their losing streak for the second consecutive week last week, reaching their lowest levels since June 2024. However, the broader market showed resilience. Market sentiment was significantly impacted by the US President Donald Trump’s announcement of reciprocal tariffs on key trading partners. Additionally, corporate earnings remained under pressure, with Nifty 50 companies reporting a modest 5 per cent profit growth in the October-December quarter, marking the third consecutive quarter of single-digit increases. Foreign investor sentiment also remained weak, with nearly $25 billion in FII outflows since the market peak in late September, driven by concerns over high valuations and a slowing economy.

One also has to keep in mind that India's GDP growth is projected to decelerate to a four-year low of 6.4 per cent this fiscal year, raising apprehensions about corporate profitability and economic stability. In the nutshell, macroeconomic indicators and global cues are expected to guide the Indian stock market in coming days and weeks.