Indian Markets Face Macroeconomic Pressures Amid Global Uncertainty

Indian markets are grappling with macroeconomic pressures and mixed global cues. The rupee has slid to a record low of 90.56 against the US dollar, dampening risk sentiment. However, relief was noted after the US Federal Reserve announced a 25-basis-point rate cut, and optimism around India-US trade talks provided some support.

For the week, the Nifty50 fell by 139.50 points, or 0.53%, closing at 26,046, while the BSE Sensex declined by 445 points to settle at 85,268. The markets experienced a mild correction, with the Nifty trading in a downward consolidation phase before ending the week in the red.

Developments on the India-US trade front are likely to influence both equities and the rupee moving forward. Analysts expect the markets to remain range-bound with volatility, and any formal breakthrough on the India-US trade agreement could trigger a significant market up-move, according to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd.

Upcoming releases include Wholesale Price Index inflation and trade balance data, as well as flash readings of the HSBC Composite, Manufacturing, and Services PMI, which will be closely monitored for signals on economic momentum.

Meanwhile, the rupee remains under pressure due to continued Foreign Portfolio Investor outflows from both bonds and equities. Anindya Banerjee, Head of Currency and Commodity at Kotak Securities, anticipates a broad trading range for the rupee of 89.50 to 91.00 on the spot market.

On Friday, FIIs were net sellers of Rs 396.26 crore, while DIIs provided support with net inflows of Rs 2,828.21 crore. The equity markets are expected to remain volatile due to a heavy schedule of global inflation data, which will shift investor focus back to monetary policy directions.

As 10-year bond yields rise across major regions, upcoming inflation prints from the US, Eurozone, and others will be closely scrutinized. The Nifty has reclaimed its key short-term moving average, and holding above this level will be crucial to sustain recovery, potentially leading towards the record high of 26,300.

However, caution is advised, as failure to maintain this support could lead to a retest near 25,700, according to Ajit Mishra, Senior Vice President of Research at Religare Broking. He suggests that investors remain selective and maintain a balanced approach amid ongoing currency volatility and mixed global cues.

Auto retail activity showed a steady rise of 2% year-on-year across various vehicle segments. Financial sectors remained in focus, particularly with public sector banks writing off Rs 6.15 lakh crore of loans over the past five-and-a-half years.

Overall, the markets extended their rebound on Friday, gaining over 0.5% due to favorable global cues, with metals, realty, and energy sectors leading gains. The report indicates that with ongoing currency volatility and global influences, market participants are likely to remain cautious in the upcoming week.