Will Ceasefire & FPI Inflows Lift Markets This Week?
Last week was a rollercoaster ride for Indian markets, with the Sensex plummeting by a whopping 1,047 points. The sharp decline was largely attributed to the ongoing tensions between India and Pakistan, which had investors on edge. However, in a surprising turn of events, a ceasefire agreement was reached between the two countries, which has led to a significant easing of tensions. This, combined with the return of foreign portfolio investors (FPIs) and strong Q4 results from many companies, has sparked hopes of a market rebound this week.
In this blog post, we’ll delve into the factors that could impact the markets this week and what investors can expect from the coming days.
Ceasefire Agreement Brings Relief
The ceasefire agreement between India and Pakistan has brought a sense of relief to the markets, which had been under immense pressure due to the volatile situation. The agreement, which was reached on February 25, has halted the exchange of fire along the Line of Control (LoC) and has paved the way for diplomatic talks between the two nations.
The ceasefire agreement has had a positive impact on the markets, with investors seeing it as a step towards reducing tensions between the two countries. This, in turn, has led to a surge in optimism, with many believing that the worst may be behind us.
FPI Inflows Return
Another positive development for the markets is the return of FPIs. After a brief hiatus, FPIs have started pouring money into the Indian markets once again. This is a significant development, as FPIs play a crucial role in determining the direction of the markets.
In the last week of February, FPIs had pulled out a massive Rs 10,000 crore from the Indian markets, citing concerns over the escalating tensions between India and Pakistan. However, with the ceasefire agreement in place, FPIs have started to return to the markets, pumping in significant amounts of money.
Strong Q4 Results
The Indian corporate sector has also reported strong Q4 results, which has further boosted investor confidence. Many companies have reported impressive earnings, with some even exceeding expectations.
The strong Q4 results are a significant positive for the markets, as they indicate that the Indian economy is still growing strong. This, in turn, has led to a surge in optimism, with many believing that the economy could continue to grow at a rapid pace in the coming years.
Travel and Tourism Sector Hit Hard
The travel and tourism sector was one of the hardest hit by the tensions between India and Pakistan. The sector, which is a significant contributor to the Indian economy, had seen a sharp decline in bookings and cancellations due to the volatile situation.
However, with the ceasefire agreement in place, there is hope that the sector could recover in the coming weeks. Many industry experts believe that the sector could bounce back strongly, as tourists and travelers start to return to India.
Currency and Reserves Data
The Reserve Bank of India (RBI) has also released data on currency and reserves, which has pointed to cautious optimism. The data showed that the country’s foreign exchange reserves had increased by $1.6 billion in the week ended February 21, while the rupee had strengthened against the US dollar.
The increase in foreign exchange reserves is a significant positive for the markets, as it indicates that the country’s economy is still strong. The strengthening of the rupee against the US dollar is also a positive development, as it could lead to cheaper imports and higher exports.
What to Expect This Week
So, what can investors expect from the markets this week? Based on the ceasefire agreement, the return of FPIs, and strong Q4 results, many are expecting a market rebound this week.
The Sensex and Nifty could see a significant surge this week, as investors return to the markets with renewed optimism. The travel and tourism sector could also see a recovery, as tourists and travelers start to return to India.
However, it’s essential to note that the markets are still volatile, and investors should exercise caution. The ceasefire agreement is still fragile, and any setback could lead to a sharp decline in the markets.
Conclusion
In conclusion, the ceasefire agreement between India and Pakistan, the return of FPIs, and strong Q4 results have sparked hopes of a market rebound this week. While the travel and tourism sector was hit hard, there is hope that it could recover in the coming weeks.
Investors should exercise caution, as the markets are still volatile, but there are reasons to be optimistic. The ceasefire agreement has brought relief to the markets, and the return of FPIs and strong Q4 results have boosted investor confidence.
Source:
https://www.thecore.in/podcasts/markets-set-to-edge-up-on-ceasefire-moves-835131
