After record rally, Indian stocks in focus

What can you expect from Indian stocks this week after rallying to all-time highs?

On Friday, Indian stocks rallied significantly to all-time highs after tanking nearly $400 billion on Tuesday, which marked the worst session in four years.

After the swearing-in ceremony of Prime Minister Narendra Modi and 73 ministers, the new government's resolve in growth policies will be in focus.

Add WION as a Preferred Source

Foreign investors will turn their attention to the budget, which is pegged as an important event that will define Modi 3.0's resolve to push through growth policies and fiscal discipline plans.

After an eventful week, investors are likely to remain confident in the Reserve Bank of India's robust growth outlook.

Last week, the blue-chip Sensex index first hit record highs on Monday and then breached that level on Friday.

During Friday's session, the Sensex index rose to a record high of 76,795 and closed over 1,600 points at a new all-time high of 76,693.36.

The stock recovery after the rout on Tuesday has been a remarkable turnaround.

The broader Nifty 50 index gained over two per cent, ending at 23,290.

Now, the focus turns to this week to see if the index can maintain that momentum and hit new highs on a better growth outlook.

RBI's robust growth outlook

India is the fastest-growing major economy, and the RBI's projections show the country will continue to be a rising star.

While the central bank kept rates unchanged for the eighth consecutive time, the growth forecast for the current fiscal year was upgraded to 7.2 per cent from 7.0 per cent previously.

However, the central bank left its projections for inflation at 4.5 per cent. While the RBI governor was upbeat on growth, elevated food inflation remains a concern.

"I shall now briefly set out the rationale for these decisions. The inflation-growth balance is moving favourably. Growth is holding firm. Inflation continues to moderate, mainly driven by the core component, which reached its lowest level in the current series in April 2024.The deflation in fuel prices is ongoing.Food inflation, however, remains elevated," said RBI Governor Shaktikanta Das.

The governor said robust economic growth continues to give the central bank space to focus on bringing down inflation.

However, apart from food inflation, the governor also warned about global uncertainty as a cause for concern.

"The Indian economy exhibits strong fundamentals, together with financial stability and positive growth momentum. Nevertheless, we need to remain vigilant in an unsettled global environment."

Still, investors will view any correction in Indian markets as an opportunity to buy.