Will the Indian stock market continue its upward momentum this week?Here’s what the experts say

After experiencing significant volatility, India’s benchmark indices regained upward momentum last week, with both Nifty 50 and Sensex indexes posting their second-highest week in 2024, driven by favorable domestic and global factors. achieved the rate of increase.

The Nifty 50 ended the week with a gain of 2.03%, its biggest weekly gain since January 2024, while the Sensex also ended the week with a gain of 1.85%, its highest since January.

Several factors contributed to this rise. First, there were expectations that the US Federal Reserve (Fed) would cut interest rates. Further, forecasts hinting at an early start to the monsoon season with above-average rainfall expected also boosted market sentiment.

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Moreover, strong domestic buying, improved voter turnout in the fourth phase, and stable oil prices also played a major role in the rally. Also, the US benchmark index hitting an all-time high also boosted the market.

Meanwhile, metal stocks rose sharply after China announced a sweeping economic stimulus package aimed at boosting its distressed real estate market. Measures include relaxing mortgage regulations and encouraging local governments to purchase unsold homes.

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In the latest trading session, the Nifty Metal Index soared to an all-time high of 9,633 points, marking a significant milestone. Reflecting the strong bullish momentum in the metal sector, the index closed with a notable gain of 7.03%.

Strong support for DII

Despite significant FII selling, the market has shown resilience, primarily due to DII absorbing most of the selling. According to Trendlin data, out of the last 13 sessions, FII remained net short in his 11 sessions and withdrew Rs 100 crore. 35.527 billion from the Indian stock market.

Conversely, DII countered this by purchasing roughly equivalent amounts. INR33,973 crores were invested during this period.

“The main catalyst for FII selling was the outperformance of the Hong Kong index Hang Seng Index, which has surged 19.33% in the past one month. FIIs are shifting funds from expensive markets like India to cheaper markets like Hong Kong. India’s PE is around 20 PE, while PE is around 10,” said Dr VK Vijahakumar, chief investment strategist at Geojit Financial Services.

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“Another important trend is that inflows from FIIs into fixed income are stable.So far till 2024, the stock market will see outflows from FPIs. INRThe bond market has seen an inflow of $26.019 billion. INR45,086 billion. Going forward, there could be dramatic changes in the flow of FPI stocks depending on the election results. “Political stability will attract huge inflows,” he added.

“There are two main reasons why foreign portfolio investors (FPIs) have been selling in FY25,” said Sunil Damania, chief investment officer at MojoPMS. “FPIs generally don’t like uncertainty and find it convenient.” Second, the market’s valuation is quite high. ”

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“We expect markets to remain volatile beyond June 4. Once the election is over, all eyes will be on the July Budget announcement, triggering further speculation and potential market volatility.” Although the market’s high valuation could be a barrier to significant market upside, there is also the potential for a downside. ”

Sunil Damania said, “Despite the current short-term uncertainty, we maintain a positive outlook on the Indian equity market and expect strong returns over the next three to five years. ” he added.

Will volatility continue?

Looking ahead, analysts expect the volatility in Indian indicators to continue from Tuesday into this week. Markets will remain closed in Mumbai on Monday due to voting in the fifth parliamentary election.

Throughout this week, investors will focus on various factors such as January-March results, voter turnout in the fifth phase of elections (particularly in the Mumbai region), macroeconomic data in India and abroad, foreign capital withdrawals, volatility, etc. It’s going to happen. Crude Oil Prices and World Market Clues.

These factors are expected to influence market sentiment and trading activity this week.

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“With the holiday shortened next week, market focus remains on earnings reports, ongoing elections, and global index trends for further clues,” said Ajit Mishra, SVP of Research at Religare Broking. Ta. Ani.

“Most major sectors participated in the uptrend, with real estate, metals and energy sectors leading the rise, but FMCG was an exception. Notably, the mid-cap index hit an all-time high, increasing by 4.5%. The performance of the broader index was notable as the index rose by 5.6%,” Mishra added.

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“The market outlook is based on Indian manufacturing and services PMI data, UK inflation data, US new jobless claims, S&P global services data, S&P global manufacturing PMI data, It will be driven by key domestic and global economic data, including quarterly corporate performance,” said Arvinder Singh Nanda, senior vice president, Master Capital Services. P.T.I..

“May PMI data to be released from both the US and India next week will be closely monitored for further market insights,” said Vinod Nair, head of research at Geojit Financial Services. We expect volatility to continue in the near term amid continued uncertainty surrounding election results and quarterly results. ”

Disclaimer: The opinions and recommendations expressed in this article are those of the individual analysts. They do not represent the views of the Mint. We recommend checking with a certified professional before making any investment decisions.