Indian equity markets are poised for a week influenced by a mix of domestic and global macroeconomic indicators, according to market analysts. Key factors expected to steer market direction include the release of domestic Purchasing Managers' Index (PMI) data, minutes from the latest US Federal Reserve meeting, and crucial developments in the India-US trade deal negotiations.
Market Performance and Domestic Strengths
Benchmark indices concluded the previous week on a robust note. The BSE Sensex surged by 1,346.5 points, or 1.62 per cent, while the NSE Nifty advanced by 417.75 points, or 1.64 per cent. This strong rebound was attributed to the resolution of the US government shutdown, solid domestic fundamentals, better-than-anticipated Q2 earnings, and a significant easing of inflation.
Vinod Nair, Head of Research at Geojit Investments Ltd, emphasized a prudent strategy, stating, "A prudent approach would be to focus on sectors with strong fundamentals, clear earnings visibility, and structural tailwinds positioning portfolios for potential upgrades in H2FY26."
Key Triggers for the Coming Week
Analysts have pinpointed several high-frequency data points that will command investor attention. Domestically, the Services PMI, foreign exchange reserves, and infrastructure output data are on the watchlist. A sharp cooling of India's retail inflation to 0.25 per cent in October from 1.44 per cent in September has already provided a significant boost to investor confidence.
On the global front, the minutes from the Federal Open Market Committee (FOMC) meeting and US jobless claims data will be scrutinized for clues on the future interest rate trajectory. Furthermore, the progress in the India-US trade deal negotiations is a critical bilateral factor that could impact market sentiment.
Sectoral Focus and Broader Themes
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that with the earnings season concluding, the market's focus will shift to broader themes. These include early signs of a demand pickup from the festive and wedding season and prospects of higher capital expenditure in the second half of the fiscal year.
He added, "Capital-market-linked stocks also remained active, supported by strong retail participation, elevated SIP flows, and enthusiasm for recent and upcoming IPOs." Sectors like information technology, metals, and capital market-linked firms are expected to remain in focus, aided by improving earnings visibility and steady domestic liquidity.
Ajit Mishra, SVP of Research at Religare Broking Ltd, cautioned that global volatility, particularly in AI-linked stocks, remains a key factor to monitor due to its potential influence on broader market sentiment.
