Market Focus on Macroeconomic Indicators and FII Inflows as Key Triggers Absent

Basis Point CRR cut during the policy meet, while the repo rate remained unchanged. Additionally, renewed buying by FIIs, following a prolonged period of selling, further bolstered market confidence.

FII outflows reduced to Rs182 billion (USD 2.2 billion) in November, a sharp drop from Rs919 billion (USD 10.9 billion) in October. Interestingly, the month showcased a tale of two halves. While FIIs remained net sellers in the first half of November, with outflows of Rs195 billion (USD 2.3 billion), they turned net buyers in the second half, bringing in Rs13 billion (USD 159 million).

All major sectors contributed to the rally, with realty, metal, IT, and banking emerging as top gainers, while FMCG underperformed. The broader indices also impressed, as both midcap and smallcap indices surged over 4 percent, surprising market participants.

Now, without any significant triggers in the stock market, all eyes are on macroeconomic indicators like IIP and CPI inflation. According to market analysts, these indicators will be crucial starting Monday. The trend of Foreign Institutional Investor (FII) inflows will also be closely monitored following their recent buying spree.

Ajit Mishra, SVP of Research at Religare Broking Ltd, highlighted the importance of managing inflation in his recent speech. If inflation eases and GDP growth remains sluggish, there may be room for a rate cut in the upcoming policy meeting. The FII inflow trend will continue to be a key focus for market participants.

Looking ahead to the upcoming week, Manish Goel, Founder and MD of Equentis Wealth Advisory Services Ltd, emphasized the impact of CPI data on market sentiment. With India’s November CPI data set to release on December 12, all eyes are on October’s inflation rate of 6.21 percent, the highest in over a year. Rising food and vegetable prices have added pressure on the economy, making the upcoming data crucial in determining future trends.

Government formation in Maharashtra is anticipated to boost economic growth in sectors like infrastructure, real estate, finance, and renewable energy. The RBI’s decision to maintain the repo rate at 6.50 percent and reduce the CRR by 50 basis points to 4 percent is expected to inject liquidity into the system and influence investor sentiment.

Overall, the recent recovery in the markets, with gains over 2 percent in the last trading week, has been driven by mixed cues and positive sentiment. With a focus on macroeconomic indicators and FII inflows, market participants are cautiously optimistic about the upcoming weeks.