Will Ceasefire & FPI Inflows Lift Markets This Week?
Last week was a tumultuous one for Indian markets, with the Sensex plummeting by a whopping 1,047 points. The sudden escalation of tensions between India and Pakistan over Kashmir led to a massive sell-off, sending the markets into a tailspin. However, with the ceasefire agreement announced on Thursday, hopes are rising that the markets may rebound this week.
One of the key factors that could lift the markets is the return of Foreign Portfolio Investors (FPIs). FPIs had pulled out a massive sum of Rs 11,000 crore from Indian markets in the past week, citing concerns over the escalating tensions. However, with the ceasefire agreement in place, FPIs are likely to return to the market, injecting much-needed liquidity.
In addition to the ceasefire, another positive development that could boost the markets is the strong Q4 results announced by several companies. Despite the economic slowdown, companies such as HDFC Bank, ICICI Bank, and Axis Bank reported strong profits, indicating that the economy is still robust.
The ease of tariffs is also a positive development that could lift the markets. The announcement by the US and China to ease tariffs on each other’s goods could lead to a resolution of the trade war, which has been weighing on global markets.
Travel and tourism were among the hardest hit sectors last week, with tourists cancelling their trips to India and travel plans being put on hold. However, if the ceasefire holds and tensions ease, it is likely that travel and tourism will recover quickly. India’s tourism industry is a significant contributor to the economy, and any recovery in this sector will have a positive impact on the overall economy.
Currency and reserves data also point to cautious optimism. The Indian rupee has been stable against the US dollar, and foreign exchange reserves have increased to $442 billion. This indicates that the economy is well-capitalized and has the ability to withstand any external shocks.
Market analysts are also optimistic about the prospects of the market this week. “The ceasefire agreement is a positive development, and we expect FPIs to return to the market,” said a market analyst. “Additionally, the strong Q4 results and easing of tariffs will also boost the markets. We expect the Sensex to touch 40,000 by the end of the week.”
Another analyst said, “The market was oversold last week, and the ceasefire agreement has provided a good buying opportunity. We expect the market to rebound strongly this week, with the Sensex touching 38,000 by the end of the week.”
While there are many positive signs, there are still some challenges that the market needs to overcome. The economic slowdown is still a major concern, and any signs of a slowdown in consumption and investment could impact the markets negatively.
In conclusion, while last week’s market fall was significant, the ceasefire agreement and the return of FPIs could lift the markets this week. The strong Q4 results, easing of tariffs, and recovery in travel and tourism also offer hope. Currency and reserves data also point to cautious optimism. While there are still challenges that need to be overcome, the market is likely to rebound strongly this week.
Source: https://www.thecore.in/podcasts/markets-set-to-edge-up-on-ceasefire-moves-835131
