Indian Market Outlook: Tariff Updates, Foreign Institutional Investor Activity, and Worldwide Trends

The upcoming week in the equity market is expected to be guided by global trends, updates on tariffs, and the trading activities of foreign investors, according to analysts. Following a robust performance last week, with benchmark indices soaring by over 4 percent, the market saw a significant rebound.

Market sentiment was uplifted by an increase in foreign capital flows, positive global developments, and improving investor confidence. “We anticipate that this positive momentum will persist as foreign institutional investors show a renewed interest in the Indian market due to attractive valuations and signs of economic recovery,” noted Siddhartha Khemka, Head of Research at Wealth Management at Motilal Oswal Financial Services Ltd.

Investors are advised to keep an eye on the movement of the rupee against the dollar and the fluctuations in the global oil benchmark Brent crude prices. In the absence of major domestic economic events, the focus will shift to the expiration of March derivatives contracts and the activities of Foreign Institutional Investors (FIIs). Furthermore, developments in the US markets, including tariff-related news and GDP growth data, are likely to impact investor sentiment.

“While US markets experienced a temporary relief following a sharp decline, divergent signals hint at potential volatility in the upcoming sessions,” remarked Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd.

Last week witnessed a considerable surge in the BSE benchmark index by 4.16 percent, along with a 4.25 percent increase in the Nifty index. Vinod Nair, Head of Research at Geojit Financial Services, noted that the domestic market ended the week with a sustained recovery. The anticipated decrease in risk-free rates and the correction in the dollar index are attracting fund inflows back to Emerging Markets (EMs). Additionally, FIIs, who have been reducing their selling activity, are increasingly becoming net buyers due to dovish signals from the US Federal Reserve, suggesting the possibility of two rate cuts this year. This has reignited optimism in the domestic market.

Foreign Institutional Investors (FIIs) displayed strong buying activity last week, purchasing equities worth Rs 3,239.14 crore on Thursday and Rs 7,470.36 crore on Friday, according to exchange data.