The domestic stock market this week would monitor the geopolitical developments after India and Pakistan reached an understanding to stop military actions, analysts said.
Illustration: Uttam Ghosh/Rediff
Moreover, macroeconomic data announcements, Q4 earnings, trading activity of foreign investors and global market trends are also likely to influence sentiments, traders said.
India and Pakistan on Saturday reached an understanding to stop all firings and military actions on land, air and sea, with immediate effect after four days of intense cross-border drone and missile strikes.
“This de-escalation removes a key overhang on investor sentiment and is likely to be seen as a major positive development by financial markets.
“Historically, markets have shown resilience and a tendency to recover following such geopolitical de-escalations,” Prashanth Tapse, senior VP (research), Mehta Equities Ltd, said.
All eyes would be on FIIs who turned negative on Friday trading session after being continuous net buyers in the last 2 weeks, he added.
“This week will be pivotal, marked by several key domestic triggers. Geopolitical developments, particularly the ongoing tensions with Pakistan, will continue to remain in focus.
“On the macroeconomic front, investors will closely monitor the release of key data points including the Consumer Price Index (CPI), Wholesale Price Index (WPI), and trade figures for exports and imports.
“Additionally, the corporate earnings season will gather pace, with several major companies such as Tata Steel, Bharti Airtel, Gail, Hero MotoCorp, Tata Motors, Lupin and BHEL scheduled to announce their quarterly results,” Ajit Mishra – SVP, Research, Religare Broking Ltd, said.
Foreign investors continue to show confidence in the country’s equity market, infusing Rs 14,167 crore so far this month, largely driven by favourable global cues and robust domestic fundamentals.
“Alongside geopolitical concerns, the ongoing Q4 corporate earnings season will continue to drive stock-specific action,” Puneet Singhania, director at Master Trust Group, said.
A sharp escalation in India–Pakistan tensions has not dampened the domestic market sentiment, an expert said.
“Investor confidence had been buoyed by sustained foreign institutional inflows and record GST collections in April, both of which signalled strong underlying economic resilience,” Vinod Nair, head of research, Geojit Investments, said.
Last week, the BSE benchmark dropped 1,047.52 points or 1.30 per cent, and the NSE Nifty declined 338.7 points or 1.39 per cent.
“Investors should zoom out and look at the markets from a broader perspective. Indian equity markets stand on strong fundamentals and we don’t have much to worry about,” Vaibhav Porwal, co-founder, Dezerv, a wealth management startup, said.
Looking ahead, markets will closely monitor key domestic macroeconomic indicators, CPI and WPI inflation data, Nair said.
