September 16th 2024.
This week, analysts are predicting that the US Federal Reserve's decision on interest rates will have the biggest impact on the domestic stock market in New Delhi. In addition, there will be a lot of attention on macroeconomic data from around the world and the trading activity of foreign investors.
Last week was a standout for the Indian equity market, with the Nifty and Sensex both reaching their all-time highs on Thursday. This was the first time that the BSE benchmark crossed the 83,000 mark.
One of the most eagerly awaited events of the year is happening this week - the US Federal Open Market Committee meeting on September 18th. It is widely expected that this will mark the beginning of a cycle of interest rate cuts in the US. While the general consensus is for a 25 basis points cut, some experts believe that there could be a more aggressive 50 bps cut.
According to Santosh Meena, Head of Research at Swastika Investmart Ltd, a rate cut of this size would have a major positive impact on global markets, especially for emerging markets like India. This is because it would likely lead to a weaker dollar and lower US yields, encouraging foreign investments in Indian equities.
On top of this, Japan's inflation data will be released on Friday, followed by the Bank of Japan's monetary policy announcement. So, there are a lot of factors that will influence market sentiment this week, including foreign investments, global tensions, and crude oil prices.
Palka Arora Chopra, Director at Master Capital Services Ltd, believes that the outlook for the market will be determined by key economic data from both India and around the world, such as India's WPI inflation, US industrial production, US Fed's interest rate decision, US FOMC's economic projections, and US initial jobless claims.
Last week, the BSE benchmark saw a 2.10% increase of 1,707.01 points, while the Nifty climbed 2.02% or 504.35 points.
According to Ajit Mishra, SVP of Research at Religare Broking Ltd, this week is crucial due to the US Fed meeting and its expected outcome on September 18th. Domestically, everyone will be keeping a close eye on WPI inflation data and foreign fund flows.
Chief Investment Strategist at Geojit Financial Services, V K Vijayakumar, pointed out that a notable trend from last week was that foreign investors were buying equity in the cash market every day. He believes this shift in their strategy is due to two reasons - the consensus that the Fed will start cutting rates this month, leading to lower US yields and potential fund flows into emerging markets, and the strong momentum and resilience of the Indian market, making it a bad decision for FIIs to not invest here.
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