Will Ceasefire and FPI Inflows Lift Markets this Week?
The Indian markets witnessed a significant correction last week, with the Sensex plummeting by 1,047 points. However, amidst the chaos, there are reasons to believe that the markets may rebound this week. The ceasefire between the government and the farmers, coupled with the return of Foreign Portfolio Investors (FPIs) and strong Q4 results from various companies, may lead to a recovery.
In this blog post, we will explore the factors that could impact the markets this week and what investors can expect from the upcoming trading sessions.
Ceasefire Brings Relief
The ongoing farmers’ protests and the subsequent violence at the Red Fort during the Republic Day celebrations had sent shockwaves across the country, leading to a sharp decline in the markets. However, the government’s decision to call off the farm laws and the farmers’ agreement to suspend their protests have brought some relief to the markets. The ceasefire has eased tension, and investors are hopeful that the markets will rebound in the coming days.
FPIs Return
Foreign Portfolio Investors (FPIs) had been net sellers in the Indian markets for several weeks due to concerns over the farmers’ protests and the subsequent violence. However, with the ceasefire in place, FPIs have started to return to the markets. According to data from the Securities and Exchange Board of India (SEBI), FPIs were net buyers in the Indian markets last week, injecting ₹1,500 crore into the equity segment. This inflow is expected to continue in the coming days, providing support to the markets.
Strong Q4 Results
Many companies have reported strong Q4 results, which could provide a boost to the markets. The Q4 earnings season has been largely positive, with many companies beating expectations. The strong results are a reflection of the resilience of the Indian economy and the ability of companies to navigate the challenges posed by the pandemic. The positive sentiment is likely to continue, providing support to the markets.
Easing Tariffs
The government’s decision to ease tariffs on certain goods is expected to provide a boost to the economy. The reduction in tariffs will make Indian goods more competitive in the global market, leading to increased exports and economic growth. The easing of tariffs is also expected to lead to a reduction in inflation, which could provide relief to consumers.
Travel and Tourism Recovery
The travel and tourism sector was severely impacted by the pandemic and the subsequent lockdowns. However, with the government’s decision to allow international travel and the easing of restrictions, there is hope for a recovery in the sector. The recovery is expected to be gradual, but it could provide a boost to the economy and the markets.
Currency and Reserves Data
The recent currency and reserves data from the Reserve Bank of India (RBI) has been positive, indicating a cautious optimism in the markets. The foreign exchange reserves have increased by $1.5 billion to $595.8 billion, indicating that the government has enough liquidity to stabilize the currency. The currency reserves data is a positive indicator, as it suggests that the government has the ability to absorb any sudden shocks to the currency.
Conclusion
Despite last week’s correction, the markets are likely to rebound this week. The ceasefire, the return of FPIs, strong Q4 results, easing tariffs, and the potential recovery in the travel and tourism sector are all positive factors that could impact the markets. The currency and reserves data also point to cautious optimism, indicating that the government has the ability to stabilize the currency and absorb any sudden shocks. Investors can expect a recovery in the markets, but it is essential to remain cautious and monitor the situation closely.
Source:
https://www.thecore.in/podcasts/markets-set-to-edge-up-on-ceasefire-moves-835131
