Mumbai/New Delhi (India), June 14: Investors in the Indian stock markets will be closely watching US-Iran peace negotiations, the Fed's policy, and domestic macroeconomic data releases for their investment decisions.
The upcoming week is expected to be driven by a combination of domestic macroeconomic releases and major global policy developments.
Developments related to the U.S.–Iran negotiations and their implications for crude oil prices and the Strait of Hormuz will continue to influence global risk sentiment.
On the domestic front, investors will monitor the release of May WPI inflation data, unemployment figures, and trade data, particularly in the context of elevated imports and a widening trade deficit.
The minutes of the RBI's latest Monetary Policy Committee meeting, scheduled for release on 19 June, will be closely scrutinised for additional guidance on the policy outlook. Foreign exchange reserves data for the week ended 12 June will also remain in focus amid ongoing efforts to support currency stability.
"Globally, the U.S. Federal Reserve's policy decision will be the most significant event. Market participants will closely assess the Fed's commentary on inflation, growth, and the future trajectory of interest rates," said Ajit Mishra – SVP, Research, Religare Broking Ltd.
"From a sectoral perspective, Nifty Private Bank, Financial Services, Pharma, and Healthcare indices continue to exhibit strong relative strength and are likely to maintain their outperformance in the near term. Conversely, Nifty CPSE, PSE, and IT indices are displaying weak price structures and relative underperformance, which may persist over the short term," said Sunny Agrawal, Head - Fundamental Researtch at SBI Securities.
Indian equity markets ended a volatile week on a strong note, snapping a two-week losing streak amid improving global sentiment and supportive measures from the Reserve Bank of India (RBI) aimed at attracting foreign currency inflows.
Investor confidence improved on optimism surrounding a potential U.S.–Iran peace deal, which raised hopes of easing geopolitical tensions and stabilising energy markets. The RBI further bolstered sentiment by introducing forex swap facilities for eligible external commercial borrowings (ECBs) and fresh FCNR(B) deposits, providing an additional boost to liquidity and foreign currency inflows.
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Despite the positive finish, investors remained cautious amid persistent foreign institutional investor (FII) selling, elevated inflation concerns, and uncertainty surrounding the global interest-rate outlook.
Consequently, the benchmark indices ended the week higher, with the Nifty 50 advancing 1.10% to close at 23,622.90 and the Sensex gaining 1.73% to settle at 75,527.95. Broader markets, however, underperformed the benchmarks, with the mid-cap index ending largely flat and the small-cap index posting a modest gain of nearly 0.46%.
Key Market Drivers
Global developments remained the dominant influence on market sentiment throughout the week. Hopes of a diplomatic breakthrough between the U.S. and Iran improved risk appetite, while easing crude oil prices provided relief after recent bouts of volatility.
A major domestic positive came from the RBI's forex initiatives. The central bank operationalised a US Dollar-Rupee swap facility for eligible ECBs raised by public sector undertakings and overseas borrowings by authorised dealer banks. Available for borrowings with a minimum maturity of three years, the facility is priced at a fixed rate of 1.5% per annum and remains open for eligible inflows until 31 December 2026.
Additionally, the RBI introduced a forex swap facility for fresh FCNR(B) deposits mobilised by banks with maturities ranging from three to five years. The scheme, available until 30 September 2026, is expected to encourage foreign currency inflows and support domestic liquidity conditions.
On the global macro front, inflation trends remained a concern. U.S. headline CPI accelerated to 4.2% year-on-year in May from 3.8% in April, marking the third consecutive monthly increase and the first reading above 4% in three years. Core CPI rose 0.2% month-on-month, while producer inflation strengthened further, with U.S. PPI increasing 6.5% year-on-year compared with 5.7% in April.
The combination of persistent inflation and resilient economic activity reinforced expectations of a prolonged "higher-for-longer" interest-rate environment in the United States.
Sectoral Snapshot
Sectoral performance remained mixed during the week. Banking, financials, and FMCG emerged as the top gainers, benefiting from improved liquidity expectations and a rotation into relatively defensive large-cap segments.
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On the other hand, IT, metals, and energy stocks witnessed profit booking and underperformed, declining in the range of 2.68% to 4.05%.
Broader markets remained subdued following their recent outperformance. Mid-caps ended largely unchanged, while small-caps posted only marginal gains, indicating that investors continue to favour relatively safer segments of the market despite the rebound in benchmark indices.
Ends.
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