Things Looking Up Again For Indian Stock Market

After a brief pause, the Indian stock market has gradually resumed its upward trajectory, due to an improved investor sentiment amid strengthening technical and fundamental tailwinds. It must be noted that last week, Sensex surged by 2,876 points to close at 82,330, while the Nifty advanced over 1,011 points to decisively breach the key psychological level of 25,000. As a fresh week begins one must remember that both benchmarks had posted robust weekly gains of 3.62 per cent and 4.21 per cent, respectively. Market analysts pointed out that technically, the indices remained comfortably above their key exponential moving averages (21, 55, 100, and 200-day), reaffirming the medium-to long-term bullish trend. It is pertinent to note that in doing do, the Nifty also broke past the crucial resistance zone of 24,800–24,850 with strong conviction and rising volumes, which is indicative of increased participation from fresh investors. Also worth mentioning is that the rally was driven by a confluence of positive triggers, which collectively piloted the drive. One of the key factors in this case was easing of geopolitical tensions following a ceasefire agreement between India and Pakistan.

Over and above this, one must remember that India's retail inflation for April cooled to 3.16 per cent—its lowest reading since July 2019—surpassing market expectations, which helped bolster investor confidence, including that of new investors. Global sentiment got an uplift due to easing of the trade tariff concerns amid constructive developments between the US and China. On the sectoral front, the metal index outperformed, rallying nearly 9.30 per cent, while India VIX declined sharply by 23.50 per cent, reflecting reduced market volatility. From the flows perspective, Foreign Institutional Investors (FIIs) continued their buying spree, injecting Rs 15,925 crore into the cash segment. Domestic Institutional Investors (DIIs) also remained net buyers, contributing Rs 9,557 crore during the week. Analysts are of the view that going forward, with the India-Pakistan conflict having been nearly stabilised, at least for the time being, and all major geopolitical events behind, investor focus is likely to shift toward assessing the ongoing Q4 corporate earnings season. Moreover, there is growing optimism around the possibility of an early India-US trade deal, which could further support to market sentiment.

Also alongside domestic developments, key global economic data releases will also influence investor flows and overall market direction. For the ongoing week and the next, the Q4 earnings with several major companies set to announce their results, including the Power Grid Corporation of India Ltd, Hindalco Industries Ltd, ONGC Ltd, Sun Pharmaceuticals Industries Ltd, ITC Ltd, Grasim Industries Ltd and JSW Steel, among many others. Nifty ended strong with a 4.21 per cent gain last week, crossing the 25,000 level after seven months, showing clear bullish strength. The index is holding above the 21-day and 55-day moving averages, which supports the upward trend. As of now, the most crucial factors to watch out for would be a long-term peace with Pakistan, an early Indo-US trade/tariff deal and higher corporate earnings.