Amid a positive turnaround from foreign institutional investors (FIIs) to India, the Indian stock market maintained a positive outlook throughout the week as the core sector output in October and stability in service PMI data showed signs of recovery, experts said on Saturday.
FIIs returning to India in expectation of a dovish monetary policy by the Reserve Bank of India (RBI) also supported the sentiment.
RBI becomes more pragmatic with a downward revision on its growth estimate for FY25. While increasing liquidity in the financial system by cutting CRR by 50 bps, RBI again reminds that maintaining macroeconomic stability is the most important," said Vinod Nair, Head of Research, Geojit Financial Services.
The market ended flat on Friday. Sensex closed at 81,709.12 while Nifty closed at 24,677.80. Nifty is sustaining above the crucial support level of 24,650.
The leading trend is still positive, as Nifty trades near the upper band of the Donchian Channel, which is trending higher — a sign of potential bullish momentum," said Om Mehra, Technical Analyst, SAMCO Securities.
India's VIX too remains subdued, trading below the 15 mark, indicating a contraction in volatility and reduced fear in the market.
Investors are now accumulating the momentum stocks as the expected pick-up in the government capex may provide some impetus to infra, capital goods, realty, cement, and metal industries in the second half this fiscal.
PSU banks outperformed against the backdrop of a liquidity injection by RBI. Market sentiments for the February monetary policy meeting also turned positive because inflation is likely to decelerate in Q4 driven by seasonal corrections in the prices of vegetables, the arrival of kharif, and expected rabi production, market observers added.
Though slightly higher, inflation may continue to remain in control. Factors like the soil moisture content, reservoir levels and seasonal winter vegetable price correction, suggests that food inflation is likely to show a declining trend which has been a cause of bother, said Siddarth Bhamre, Head, Institutional Research at Asit C Mehta Investment Interrmediates Ltd.
The direction for the week will be taken by US payroll and US CPI inflation data releases, giving some light on the Fed's take from the December meeting.
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