US Federal Reserve Chair Jerome Powell
Credit: Reuters photo
This week, we expect the market to witness a gradual move-up with stock-specific action. The big data release will be that of India’s April-June quarter (Q1FY25) GDP, to be released by the National Statistical Office on Friday. The focus will also be on monthly futures & options expiry as well as global cues, among them the United States GDP and consumer confidence data. Markets on Monday will react to commentaries of Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium.
Last week, Nifty witnessed recovery amid positive global cues and closed with gains of 282 points or 1.1 per cent at 24,823 levels. Broader markets continued to outperform with Midcap100 and Smallcap100 up 1.6 per cent and 3.5 per cent respectively. Nifty Realty was a major loser, down 2.9 per cent, while Metals, PSU Banks, Fast Moving Consumer Goods, and Pharma gained 2-3 per cent each.
Consumer companies have experienced a sequential improvement in demand, with signs of revival in the rural market due to price cuts and enhanced consumer offerings. Management of various FMCG companies anticipate implementing price increases in the second half of FY25 to offset rising raw material costs and drive revenue growth.
Defence stocks, last week, took a pause and saw a sharp decline after a rally. However, we might see some action this week amid Defence Minister Rajnath Singh's visit to the US from August 23-26. On the first day of the event, India and the US signed two key agreements which seek to bolster defence ties between the two countries.
Crude oil prices dropped by more than 3% on Gaza ceasefire talks and a weak Chinese economy. Thus, stocks from the Aviation, Paints, FMCG, and Oil Marketing sectors were in focus. The US dollar index is trading near a seven-month low, reflecting growing expectations of the Fed easing policy, which is positive for emerging markets like India. With the dollar index likely to remain weak, increased investment flows from FIIs are expected, contributing to the overall strength of the Indian market.
Sentiments got a boost after the Fed meeting minutes showed the policy easing would likely begin next month. At the Jackson Hole symposium, Powell unequivocally stated that the time has come for the Fed to cut rates. Hopes are running high for a rate cut in the September meeting followed by more rate cuts in subsequent meets. Hence, this will likely shape the market's direction in the coming week.
(The author is the head of Retail Research, Motilal Oswal Financial Services Ltd)