Will Ceasefire & FPI Inflows Lift Markets this Week?
The Indian stock market witnessed a significant decline last week, with the Sensex plummeting by 1,047 points. However, as we enter a new week, there are signs that the markets may rebound. The ongoing ceasefire and Foreign Portfolio Investors (FPIs) returning to the market could be the catalysts that lift the market sentiments. In this blog post, we’ll explore the reasons why the markets may edge up this week and what it means for investors.
Ceasefire: A Step Towards Calm
The recent ceasefire between the government and the 12 opposition parties has brought a sense of relief to the market. The truce, which has been in place since Saturday, has eased the tension between the two sides, allowing the market to focus on other factors that can impact its performance. The ceasefire has also boosted investor confidence, which could lead to increased participation in the market.
FPI Inflows: A Shot in the Arm
FPIs have been significant players in the Indian market, accounting for a substantial portion of the market’s liquidity. However, their participation has been limited in recent times due to concerns over the government’s policies and the ongoing trade tensions. The recent ceasefire and the government’s decision to reduce the corporate tax rate could attract FPIs back to the market. This inflow of funds could provide a much-needed boost to the market, helping it to recover from last week’s decline.
Q4 Results: A Guide to Expectations
The Q4 results of Indian companies are expected to be released soon, and they could provide a glimpse into the future performance of the market. While the Q3 results were mixed, with some companies reporting better-than-expected numbers, others struggled due to various reasons. The Q4 results could be a guide to investors on what to expect from the market in the coming quarters.
Travel and Tourism: A Sector to Watch
The travel and tourism sector was one of the hardest hit by the recent tensions and the subsequent ceasefire. The sector, which is a significant contributor to India’s GDP, saw a decline in bookings and cancellations. However, if the ceasefire holds and the situation normalizes, the sector could recover quickly. Investors may want to keep an eye on the sector’s performance in the coming weeks to gauge its recovery.
Currency and Reserves: A Cautionary Tale
While the ceasefire and FPI inflows could provide a boost to the market, the currency and reserves data also point to cautious optimism. The rupee has been under pressure due to the ongoing trade tensions and the government’s decision to reduce the corporate tax rate. The country’s foreign exchange reserves have also been declining in recent times. While the situation is not alarming, it does highlight the need for investors to be cautious and not get too excited about the market’s performance.
Conclusion
The Indian stock market has been volatile in recent times, with last week’s decline being a significant setback. However, the ceasefire and FPI inflows could provide a much-needed boost to the market. The Q4 results, travel and tourism sector, and currency and reserves data also point to cautious optimism. While there are no guarantees in the market, investors may want to keep an eye on these factors and adjust their strategies accordingly.
Source:
https://www.thecore.in/podcasts/markets-set-to-edge-up-on-ceasefire-moves-835131
