Market cheer to continue; eyes on fresh macros

This week, we expect the positive momentum to continue backed by strong FII inflow, healthy domestic macros, and receding concern about the US economy slowing down. PMI data will be released by US, Europe and India along with US GDP, consumer confidence and new home sales data. Powell speech this week will be keenly eyed along with US Core PCE data which could provide further direction.

Last week, domestic equities rallied for the second consecutive week supported by positive global cues after a sharp 50 bps rate cut by US Fed and 4-month low initial jobless claim. Nifty touched a new high of 25,849 and closed the week with handsome gains of 434 points (+1.7 per cent) at record high levels of 25791 levels. Broader market however bore the brunt of the profit booking with the Midcap100 up only 0.3 per cent while Smallcap100 lost 0.9 per cent. Sectorally it was a mixed bag with realty, private bank, financials, and auto up 2-4 per cent. PSU banks, pharma and IT were the biggest losers in the range of 2-3 per cent.

Domestic equities cheered the 50 bps rate cut by the US Fed as it raises the expectation that RBI may follow soon. Any hint from the Reserve Bank of India regarding interest rates or economic policy can cheer the market. Despite the US starting the rate cut cycle after 4 years, BoE, China and Japan maintained status quo.

Advance tax collection surged by 22.6 per cent to Rs 4.36 lakh crore in H1FY25 while net direct tax collections rose 16.12 per cent to ₹9.95 lakh crore, with personal income tax showing significant growth over corporate income tax. India’s wholesale price index (WPI)-based inflation fell to a four-month low of 1.31 per cent in August from 2.04 per cent in July due to a reduction in the prices of manufactured products and food items. All these data points, along with Fed rate cut, boosted the sentiments.

FIIs have been strong buyers of Rs 12,200 crore this month, and could get further boost post rate cut, as India now enjoys top weightage among MSCI emerging markets.

Markets are gradually climbing up and we expect this positive momentum to continue next week backed by strong FII inflow, healthy domestic macros, and receding concern about the US economy slowing down.