Powell’s Monday Speech Bound To Impact Market Sentiments

Indian equity markets closed last week on a subdued note with the Nifty and Sensex declining nearly 0.7 per cent each, settling at 24,853 and 81,721, respectively. This pullback follows a robust four per cent rally the previous week. In contrast, the bank Nifty index edged up by 43 points buoyed by positive sentiments among banking heavyweights. Despite the downturn, Nifty continues to trade above its key moving averages, including the 21-day and 200-day EMAs, indicating the underlying strength. Going forward, there is likelihood that in the coming weeks, the markets would remain influenced by a mix of global and domestic cues. Volatility may rise due to the expected announcement of a new US tax policy, which could impact global investment flows in the long run. On the domestic front, the Q4 FY25 earnings season continues to be a key focus, with investors closely tracking management commentary and sectoral trends. The release of Q1 FY25 GDP data, expected at six per cent YoY, will be a crucial indicator of the economic momentum.

Meanwhile, other factors like possible progress in the India-US trade deal and comments from Fed Chair Jerome Powell will also play a role in shaping the market sentiment. A look at the events scheduled up ahead and developments thereof in India, the US and elsewhere can also influence the capital market. In this scenario, Powell’s speech slated for Monday will provide insights into the Federal Reserve’s monetary policy stance. Market participants will look for signals on future rate decisions, especially with potential shifts under Trump administration’s policies and economic uncertainties. All eyes will also be on Wednesday’s developments after the release of the FOMC Minutes vis-à-vis May 6–7 meeting. This will detail the Federal Reserve’s discussions on the current 4.25–4.50 per cent federal rate. The minutes will provide key insights into the Fed's outlook on interest rates, inflation, and the overall economic condition. On the same day the India Industrial Production and Manufacturing Production report for April will be also released amid a forecast at 3.2 per cent (YoY) and 3.1 per cent (YoY), respectively.

The indicator reflects steady growth in manufacturing, a critical component of the country’s industrial output. The US GDP Growth Rate (Second Estimate, Q1 2025) is set to be released on Thursday. This is forecast at -0.3 per cent, consistent with the advance estimate. Subsequently, the US initial jobless claims data, a key indicator of US labour market health, will also be released on Thursday. The next day, India’s GDP growth for Q1 2025 that forecasts six per cent (YoY) will be released. A stronger-than-expected reading could reinforce confidence in India's growth trajectory. Key economic indicators from the US will be released on the same day, including personal income and personal spending data for March. The forecast values are 0.5 per cent (MoM) and 0.4 per cent (MoM), respectively. The data helps in accessing consumer confidence, demand and economic momentum. Meanwhile on May 31, China’s NBS Manufacturing PMI for May is set to be released. It is forecast at 48.6. It measures the performance of the manufacturing sector and is derived from a survey of large-scale, state-owned companies.