Indian Stock Markets Decline Amidst Global Uncertainties

Indian Stock Markets Decline Amidst Global Uncertainties
Indian Stock Markets Decline Amidst Global Uncertainties
Indian Stock Markets Decline Amidst Global Uncertainties
Indian Stock Markets Decline Amidst Global Uncertainties

Indian Stock Markets Decline Amidst Global Uncertainties

Investors Await US Inflation Data and RBI’s Monetary Policy

Indian Stock Markets Decline Amidst Global Uncertainties

The benchmark stock market indices in India witnessed a downward trend on Tuesday as investors braced themselves for critical US inflation data and the Reserve Bank of India’s (RBI) monetary policy decision. The S&P BSE Sensex closed 106.98 points lower at 65,846.50, while the NSE Nifty 50 settled at 19,570.85, down 26.45 points.

Markets Reflect Global Uncertainties

The surge in volatility, driven by investor apprehension, led to a decline in broad market indices. Among the sectoral indices, Nifty Metal experienced a drop of over 1 percent, primarily due to a decline in shares of Hindalco Industries. In contrast, Nifty Bank and Nifty Financial Services registered gains by the end of the trading session.

Analysts have been anticipating a market correction, considering the elevated levels they have reached in recent months. The weakness observed in global markets, particularly in the US and China, has played a pivotal role in introducing volatility to domestic markets. The upcoming release of US inflation data and the RBI’s policy decision have kept investors on Dalal Street on edge.

Eye on RBI’s Monetary Policy Committee Meeting

Investors are closely monitoring a range of stock market triggers in the coming week. These include the ongoing first-quarter results of the current fiscal year (Q1FY24), domestic and global macroeconomic data, foreign capital inflows, and the upcoming Monetary Policy Committee (MPC) meeting by the RBI. With expectations that the central bank will maintain unchanged benchmark interest rates, the rate-setting monetary policy panel is set to commence deliberations. The market largely anticipates the RBI to uphold its existing stance, especially as India’s retail inflation surged last month due to rising vegetable prices.

Corporate Earnings and Macro Data

In the week ahead, investors will be engrossed in scrutinizing corporate earnings, as the final batch of Q1FY24 results is slated for release. On the macroeconomic front, market participants will be closely tracking key indicators, including industrial production, retail inflation, and manufacturing production data, all scheduled for release on August 11, 2023.

Foreign Institutional Investors’ Role

Foreign institutional investors (FIIs) have continued their selling streak in Indian equities for consecutive sessions. This trend has emerged amidst weak global cues, as sharp gains in US bond yields and the US dollar have weighed on stock market sentiment. The downgrading of the US rating and profit booking by concerned investors, citing high stock valuations, have contributed to the prevailing negative sentiment. Analysts have also raised concerns about these factors, alongside mixed global economic data, which may have added to the cautious market sentiment.

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