India-US Trade Deal and FII Activity: Will this week be crucial for D-Street?
The stock market world always balances excitement and uncertainty. Last week, Indian equity benchmarks showed a strong comeback, which was a positive signal for investors. Nifty rose 1.29% to settle at 24,741, and Sensex rose 1.13% to close above 80,710. This momentum was not just limited to large-caps, but midcap and smallcap stocks also performed strongly. The midcap index rose 1.8% and the smallcap index rose 2.5%, which makes it clear that the risk appetite of investors is gradually improving.
There were two strong reasons behind this optimism – on the one hand, domestic macroeconomic data built confidence and on the other hand, policy reforms made the market more stable. India’s Q1 GDP growth was recorded at 7.8%, which is the fastest pace in the last five quarters. This figure clearly shows that our economy is becoming quite strong and stable despite global challenges. Along with this, the new step of the GST Council, in which tax slabs have been simplified and fixed at 5% and 18%, has brought a big relief to the investors. This decision is bringing fresh optimism in the cyclical sectors and the overall market sentiment has also become positive.
Technical charts also seem to support this momentum. Nifty formed a bullish candle on the weekly chart and also reclaimed the 20 and 50-day EMAs. RSI is on an upward slope and MACD confirmed a positive undertone with a bullish crossover. Market experts say that if this trend sustains, then further rally could be seen in the next few weeks.
India-US Trade Deal and Market Hope
This week investors will be eyeing a major development – the India-US trade deal. If any positive update comes on this deal, then market sentiment could get a further boost. Trade partnership between India and the US has always held a strategic importance. It is not just limited to exports-imports, but also directly impacts sectors like IT, manufacturing, pharma, and defense.
In today’s globalized economy, when the U.S. As India strengthens its trade relation with the powerhouse, it is a positive signal for foreign investors as well. If the deal is finalized on favorable terms, it will support both FDI inflows and corporate earnings in the long-term. Hence, D-Street participants are waiting for this update as it can have an immediate and visible impact on stock indices.
Impact of Domestic Data
On the domestic front, inflation data, bank credit and deposit growth numbers will be crucial this week. Investors will have a special eye on inflation as it directly influences the policy stance of RBI. Also, forex reserves data is important, especially in view of the recent underperformance of banking stocks. If any positive relief is seen here, then new buying momentum can come in banks and financial sector.
Global Data and Fed Policy Expectations
Global data will also play a big role this week. Fresh numbers of CPI, PPI, jobless claims and consumer sentiment will come from the U.S., which will shape the policy expectations of the Federal Reserve. If the data indicates softening of inflation, then the aggressive stance of the Fed can be softened, which will become a relief factor for Indian equities.
Technical Levels and Market Movement
Technically, Nifty is still consolidating in a triangle pattern. The recent rebound has happened from the level of 24,400, which forms a strong support zone. Market experts say that if the index decisively breaks out above 25,000, it will trigger fresh momentum that could take it to 25,250 and then 25,400. If there is a downside, the 24,280–24,400 zone will provide an immediate cushion, and strong support is formed at 24,150.
Crude, Bullion and Currency Movement
Commodity market will also play an important role in deciding the direction of D-Street. Gold has rallied on recent dovish Fed cues, while crude oil prices are looking stable due to demand signals and easing of geopolitical tensions. Currency market will also be monitored. Rupee recently touched a record low of 88.36/$, but timely RBI intervention controlled the volatility. If rupee remains stable, it will create a comfort zone for the market.
FII Activity and Market Sentiment
The behaviour of Foreign Institutional Investors (FIIs) will also be closely tracked this week. Last week FIIs sold equities worth around Rs 5,667 crore, but Domestic Institutional Investors (DIIs) absorbed this selling pressure with inflows of Rs 13,444 crore. It is the steady support of DIIs that is providing a cushion to the market. If FIIs reduce their selling intensity, the indices could gain further strength.
Conclusion
This week multiple triggers will be active for D-Street – inflation data, global cues, FII activity, rupee movement and most importantly India-US trade deal. This trade agreement can become a strong sentiment booster for investors, as its impact will not only be short-term but also on long-term economic ties and business growth. Hence this week can prove to be a turning point for market participants.
Disclaimer:
This article is for informational purpose only. The views and analysis given here are based on market trends and available data. Do consult your financial advisor before taking any investment decision.
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