Next Week’s Market Focus: FOMC, PMI Data, and Global Talks

As the Indian equity markets face significant volatility, investors are keenly looking ahead to key developments that could impact market sentiment. The upcoming week (February 17) will be critical, with focus on the FOMC minutes, ongoing Ukraine-Russia peace talks, and the release of manufacturing and services PMI flash data. After a notable decline in indices, the market may attempt a rebound, but the sustainability of this movement remains uncertain.

Indian Market Performance

The Indian equity markets saw a significant downturn last week, with the Nifty 50 falling 631 points to 22,929 and the BSE Sensex dropping 1,921 points to 49,099. This decline marks the largest weekly loss since December, driven by persistent selling pressure from FIIs and concerns over weak corporate earnings, particularly in the mid and small-cap segments.

External Influences

Investors are facing a challenging environment with the US inflation rate unexpectedly rising to 3% in January, dampening hopes for a Federal Reserve rate cut. Additionally, uncertainty regarding US trade policies and tariffs is contributing to market hesitance. The rupee’s depreciation is also a concern, as it may lead to further FII outflows.

Upcoming Data Releases

Key economic data coming up includes:

• FOMC Minutes: Investors will analyze the January meeting’s minutes for insights into future interest rate policies.
• Ukraine-Russia Peace Talks: Developments in these talks may significantly influence global market sentiment.
• PMI Flash Data: Manufacturing and services PMI flash data from various nations, including the US and UK, will provide insight into economic health.

Investor Sentiment

The prevailing sentiment among investors is one of caution, particularly as corporate earnings have fallen short of expectations. The FII outflows have reached Rs 29,183 crore in February, although domestic institutional investors (DIIs) have been buying to offset this trend.

Technical Analysis

From a technical standpoint, the Nifty remains under bearish pressure, trading below its 10 and 20-week exponential moving averages (EMAs). However, a potential rebound is possible if resistance levels at 23,250 and 23,600 are breached. Immediate support is anticipated at 22,900, with further levels at 22,750 and 22,600.

Analyzing Sectoral Weakness: The Impact of Declines in Nifty Midcap 100 and Smallcap 100 Indices on Investor Sentiment and Volatility in India VIX

• The Nifty Midcap 100 and Smallcap 100 indices saw declines of 7.4% and 9.4%, respectively, indicating widespread sectoral weakness.
• The volatility index, India VIX, rose by 9.72% to 15.02, signaling increased caution among investors.

At last, The week ahead is shaping up to be pivotal for Dalal Street, with critical economic indicators and geopolitical developments on the horizon. While a rebound in the market is possible, the sustainability of any upward movement will largely depend on external factors such as FII flows, corporate earnings recovery, and clarity on international trade policies. Investors should remain vigilant and informed as they navigate this volatile landscape.