Will Ceasefire & FPI Inflows Lift Markets this Week?
The Indian stock market witnessed a tumultuous week, with the Sensex plummeting by 1,047 points. The market volatility was primarily attributed to the ongoing tensions between India and Pakistan. However, the recent ceasefire agreement between the two nations has brought some respite, and the foreign portfolio investors (FPIs) are expected to return to the market, which may lift the sentiment and propel markets higher this week.
Strong Q4 Results and Easing Tariffs
Despite the market’s recent downturn, several companies have reported strong Q4 results, which may have a positive impact on the market. Many companies have seen an increase in their earnings and revenue, driven by factors such as a low base effect, a strong economy, and a favorable business environment. These positive earnings reports may help to boost investor confidence and lead to a rebound in the market.
Additionally, the recent easing of tariffs by the US government on Indian goods may also have a positive impact on the market. The US-India trade relationship has been a significant contributor to India’s economic growth, and the relaxation of tariffs may help to boost trade between the two nations.
Travel and Tourism: A Hit but Recovery Possible
The travel and tourism sector was severely impacted by the tensions between India and Pakistan. The number of tourists visiting India decreased significantly, leading to a loss of revenue for the industry. However, if the ceasefire holds and tensions ease, the sector may recover quickly. India’s tourism industry is a significant contributor to the country’s economy, and any improvement in the sector’s prospects may have a positive impact on the overall market sentiment.
Currency and Reserves Data Point to Cautious Optimism
Recent data on currency and reserves also point to cautious optimism. India’s foreign exchange reserves have increased significantly, which indicates that the country has sufficient foreign exchange reserves to meet its external obligations. The rupee has also stabilized against the US dollar, which may help to ease concerns about currency volatility.
FPI Inflows: A Major Catalyst
FPI inflows have been a major catalyst for the Indian market in recent years. FPIs have been attracted to India’s strong economic growth story, led by a young and growing population, a large and growing middle class, and a favorable business environment. The recent ceasefire agreement and the easing of tensions between India and Pakistan may lead to a resumption of FPI inflows, which could have a positive impact on the market.
Market Expectations
Given the recent developments, market expectations are cautiously optimistic. The Sensex is expected to rebound this week, driven by the ceasefire agreement, FPI inflows, and strong Q4 results. The Nifty is also expected to follow suit, with many analysts predicting a rebound in the coming days.
Conclusion
In conclusion, the Indian stock market may rebound this week, driven by the ceasefire agreement between India and Pakistan, FPI inflows, and strong Q4 results. The travel and tourism sector may also recover if tensions ease, and currency and reserves data point to cautious optimism. While there are still risks and uncertainties in the market, the recent developments may have laid the groundwork for a rebound. As the market navigates these uncertain times, it is essential to remain cautious and do thorough research before making any investment decisions.
Source:
https://www.thecore.in/podcasts/markets-set-to-edge-up-on-ceasefire-moves-835131
