US Fed rate cut, FII selling pause hopes: What can affect the Indian stock market?
&imwidth=600&imheight=450&format=webp&quality=medium "US Fed rate cut, FII selling pause hopes: What can affect the Indian stock market?")
Bombay Stock Exchange Photograph: (ANI file)
On Friday, BSE, Nifty and Nifty 50 showed a massive slump. However, several factors can revive investor sentiment this week, sending the Indian stock market upwards. Here's what experts said about factors that can revive the Indian stock market.
The Bombay Stock Exchange (BSE) Sensex on Friday lost 693 points and closed at 81,306. The Nifty 50 index closed at 24870, losing 213 points. Bank Nifty index lost 606 points, finishing at 55149. The Indian stock market dropped drastically after a six-day surge due to panic selling ahead of Jerome Powell's speech as the Chair of the Federal Reserve of the United States. However, experts believe that Monday could see a massive reversal, as global investor sentiment has improved after Powell's speech at the Jackson Hole Symposium.
Here are the factors that can impact the Indian stock market
US Fed rate cut hope
After the annual gala of the American Central Banks, hopes of a US Fed rate cut this year revived, which put US dollar rates under pressure. Experts have predicted that FII (Foreign InstitutionalInvestors) selling is likely, which can trigger bullish sessions.
Experts said Powell's speech, the US Fed rate cut, sluggish dollar can affect the Indian stock market this week.
Sugandha Sachdeva, Founder of SS WealthStreet, told Mint that the market will open on a positive note. It is because in the address, Jerome Powell gave a signal that a rate cut is imminent. Sachdeva said that due to the rising risks of a weakening US job market, Powell conceded the possibility of shifting the Fed’s monetary policy stance to support employment and growth.
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Anuj Gupta, Director at Ya Wealth, told the paper that after the Jackson Hole Symposium, the Indian market is expected to follow the global cues. He said that the international market is expecting a US Fed rate cut of 25 basis points. He, however, said that despite this buzz, the Nifty 50 might not be able to cross the 25,250-25,300 hurdle.
FIIs, geopolitical tensions, and RBI rate cut hopes
Gupta also said that he is expecting a pause in the selling of FIIs. He said such investors have been selling in the Indian stock market. However, with the US Fed rate cut buzz, there could be a pause. He said that the rate cut has put bond yield and dollar under pressure, which can trigger a pause in FII selling. While FIIs' outflow last week was Rs 1559.51 crore, DIIs' inflow was Rs 10,388.23 crore.
There is a buzz of an RBI rate cut as well, which could affect the market. There is speculation that the RBI could consider a 25-bps rate cut.
Gupta, however, said there is uncertaintyover the Russia-Ukraine war despite hopes of a Donald Trump-Vladimir Putin-VolodymyrZelensky meeting. Any change in these conditions could change the market dynamics, he added.