Indian Stock Investors Now Keep Eye on Inflation Data, Modi 3.0 Policy Decisions for Fresh Cues

Mumbai, June 9: The Indian stock market will be watchful of global factors after the Lok Sabha elections and monetary policy decisions are settled, next week. Analysts believe that investors will keep an eye on the US Fed interest rate decision, India's inflation data, and the decisions of the new government for the upcoming week starting from Monday.

The US Fed will announce US core and consumer price inflation figures, alongside the US Federal Reserve's interest rate decision and Federal Open Market Committee (FOMC) economic projections on June 12. Bank of Japan will also announce its interest rate decisions this week. Stock Market in India Gains 3% After Announcements of PM Narendra Modi’s Return for Record Third Term and RBI’s Monetary Policy.

Domestically, On June 12, 2024, India will announce industrial production data and inflation data which will be closely tracked by the investors. India's retail inflation eased to 4.83 per cent in April, down from 4.85 per cent in March. However, consumer food price inflation surged to 8.70 per cent from 8.52 per cent last month.

The retail inflation in India though is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario. "We believe volatility is likely to decrease now that major events are behind us, with the focus shifting to domestic macroeconomic data such as IIP, CPI, and WPI for further signals. Additionally, global cues, particularly the upcoming US Fed meeting, will be closely watched by participants. The recovery following the post-election decline suggests resilience among participants, and we expect the prevailing tone to continue," said Ajit Mishra, SVP, Research, Religare Broking Ltd. Stock Market Today: Sensex Jumps Over 1,200 Points As India VIX Crashes 27%.

According to the experts, the market will also have an eye on the portfolio allocation under the new government. "Next week's focus will be on the allocation of key cabinet portfolios such as Finance, Defense, Roads, Energy, Commerce, and Railways. The market will continue to be volatile with upward biasedness," said Siddhartha Khemka, Head - of Retail Research, at Motilal Oswal Financial Services Ltd.

Mishra recommended to maintain a positive outlook unless the Nifty decisively breaks below 2,600, with an upside target in the 23,800-4,000 range. "The renewed participation of sectors like IT and FMCG, which were previously on the sidelines, supports our confidence. However, traders should remain cautious and focus on stocks that are moving in line with the benchmark," he added.

Dalal Street was expecting a historical spurt in the benchmark indices after the exit poll but failed to see what was coming the very next day. On June 4, the bloodbath began in the market and Sensex declined by a whopping 4,389.73 points while Nifty fell by 1,379.40 points on the results day due to incumbent BJP could not secure the majority on its own. The national democratic alliance (NDA) managed to get a comfortable majority.

Investors lost around Rs 31 lakh crore in the stock markets after the actual results. The combined market cap of BSE-listed firms also retreated to Rs 394 lakh crore on the day, from Rs 425 lakh crore. However, last week, the BSE benchmark upped 2,732.05 points or 3.69 per cent and Nifty jumped 759.45 or 3.37 per cent.

The BSE Sensex traded at an all-time high on Friday, while the Nifty 50 index closed in green at 23,267.75, marking a gain of 446.35 points or 1.96 per cent, and hitting a high of 23,320.20. Owing to the volatile situation in the market, the foreign portfolio investors (FPI) became the net sellers for the third consecutive month in June, offloading equities worth over Rs 14,794 crore.

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