Global trends and activities of foreign institutional investors (FIIs) are expected to determine the direction of the local stock markets this week, according to analysts. Additionally, the market will react to the results of the Maharashtra and Jharkhand assembly elections on Monday.
Last Friday, the Sensex and Nifty experienced a strong surge following several weeks of decline. On that day, both indices recorded their highest single-day gains in five months. The 30-share BSE Sensex jumped 1,961.32 points, or 2.54%, to close at 79,117.11 points. Meanwhile, the NSE Nifty rose by 557.35 points, or 2.39%, to settle at 23,907.25 points.
Pressure on the Rupee
Swastika Investmart Ltd. Research Head Santosh Meena said, “The Maharashtra and Jharkhand election results are key to market direction, especially Maharashtra, where the NDA secured a clear victory. However, global factors still pose risks.”
He explained that rising tensions between Russia and Ukraine, along with increasing crude oil prices, have raised inflation concerns. The strengthening US dollar and rising US bond yields are putting pressure on the rupee, leading to record withdrawals by FIIs.
FII Inflows Are Key
Meena stressed that FII inflows will be crucial for the market’s movement. He noted that the ruling Mahayuti alliance retained power in Maharashtra, while the India Alliance won in Jharkhand. Global crude oil prices and rupee-dollar fluctuations will also impact the market. He added that US GDP data and the Federal Open Market Committee (FOMC) meeting minutes will influence investor sentiment globally.
Election Results Boost the Market
Master Capital Services Ltd. Director Palka Arora Chopra said Maharashtra’s election results are a positive signal for the Indian stock market. She added that infrastructure-related sectors would benefit from the results.
Religare Broking Ltd. Senior Vice President (Research) Ajit Mishra said, “Macroeconomic indicators like GDP will remain important for the market. Investors will also keep an eye on FII inflows, especially considering their recent selling trend.”