US Fed Interest Rate Decision and Earnings Set to Drive Market Momentum This Week

The US Fed interest rate decision, FII inflows, quarterly corporate earnings, and geopolitical tensions are set to influence the stock market this week, analysts predict.

Fed Interest Rate Decision and FII Activity to Drive Market Momentum

Analysts are anticipating a crucial week for the Indian equity market, with key factors such as the US Fed interest rate decision, foreign institutional investor (FII) activity, and corporate earnings likely to steer market trends. Investors are also closely monitoring geopolitical developments, particularly the escalating tensions between India and Pakistan following the Pahalgam terror attack.

Optimism Amid Trade Deal Hopes and FII Inflows

Despite global uncertainty, optimism remains over a potential trade agreement between the US and India. The sustained FII inflows have provided a boost to market sentiment. However, experts caution that investors are exercising caution due to the ongoing geopolitical tensions and the fragile global environment, especially amidst the US-China tariff war.

Key Macroeconomic Data to Watch This Week

On the economic front, all eyes will be on the HSBC Services PMI (Purchasing Managers’ Index), a key indicator of economic health, which will be closely scrutinized by investors.

Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, stated, “This week is crucial, packed with key domestic and global triggers. The Fed interest rate decision and developments related to the ongoing geopolitical tensions will remain on the radar.”

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Corporate Earnings to Shape Market Sentiment

The week will also bring important corporate earnings reports, with prominent companies like M&M, Coal India, Asian Paints, Larsen & Toubro, and Titan scheduled to announce their quarterly results. These earnings will play a significant role in shaping market sentiment and stock-specific movements.

Geopolitical Tensions and Trade Talks Add Uncertainty

While the Indian stock market has shown resilience, with the BSE benchmark gaining over 1,200 points last week, experts remain cautious due to the potential risk of a US recession and continued tensions between India and Pakistan. Gaurav Garg, an analyst at Lemonn Markets Desk, noted that while a sharp correction is not expected, the market may remain cautious in the near term.

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FII Inflows and Dollar Weakness Boost Indian Market

One of the major developments behind the recent uptick in FII inflows is the weakening US dollar, which has reversed the momentum trade towards the US seen after President Trump’s election victory. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, explained, “The weakness in the dollar and the pause in reciprocal tariffs by President Trump have aided FII inflows to emerging markets, particularly India.”

State Bank of India’s Q4 Results Impact Market Sentiment

Amid these market developments, the State Bank of India reported a decline in its consolidated net profit by 8.34% for the January-March quarter. This was attributed to a decrease in net interest margins, which may influence the banking sector’s performance in the near term.

Market Outlook: Cautious Optimism and Stock-Specific Action

Despite the ongoing geopolitical concerns, analysts expect the Indian market to consolidate within a broad range with a positive bias. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that stock-specific action will likely dominate, although some volatility could be expected due to the geopolitical tensions.