Uptick more likely amid positive cues

Despite volatility in the later sessions of last week, which was mostly caused by conflicting global developments, sentiment was positive from the beginning and was bolstered by positive domestic cues

As the second quarter (Q2) earnings season almost gets over, domestic indicators such as services PMI, infrastructure output data and NDA’s government formation in Bihar post landslide victory will drive the market sentiment next week, according to market watchers on Sunday.

Globally, market mood will be shaped by key US economic releases, including the minutes of the latest FOMC meeting.

“Additionally, the ongoing volatility in AI-linked stocks will remain a key factor to watch, given its potential to influence broader market sentiment,” said Ajit Mishra of Religare Broking.

This week, the domestic indices staged a strong rebound during the week, ending firmly in the green after the recent phase of weakness.

Despite volatility in the later sessions, which was mostly caused by conflicting global developments, sentiment was positive from the beginning and was bolstered by positive domestic cues.

With the help of lower GST rates and falling food prices, India's retail inflation dropped precipitously from 1.44 per cent in September to 0.25 percent in October, which greatly boosted investor confidence.

Because of lower prices for non-food items and softer crude oil, wholesale inflation also fell into negative territory in October, falling 1.21 per cent.

“Additional support came from strong macro indicators, including a 7 per cent YoY rise in net direct tax collections to over Rs12.92 lakh crore, reflecting healthy corporate profitability and steady income growth,” Mishra said. Expectations of an NDA win in the Bihar elections also helped boost political sentiment and increase risk appetite in general.

Following the above-mentioned positive cues, both benchmark indices gained over one and a half per cent, with the Nifty closing at 25,910.05 and the Sensex settling at 84,562.78, the analyst said.

IT, pharmaceutical, and auto stocks led the recovery, while sectoral performance stayed generally positive due to declining inflation, steady demand patterns, and rising global sentiment.

The banking index, setting a new record high, was one of the week's major highlights. The only industry to finish slightly lower was real estate, most likely as a result of profit booking after a robust previous run-up.

Furthermore, the India VIX closed at 11.9375 after dropping 4.94 per cent over the course of the week, suggesting less volatility and a more stable market environment.