Market outlook this week: US Fed interest rate, domestic inflation data, global cues to drive stock markets

In a week full of political surprises, the Indian indices saw high volatility but ended up gaining more than 3 per cent, buoyed by Prime Minister Narendra Modi's return for the record third term and Reserve Bank of India's (RBI) monetary policy announcements.

Sensex hit a fresh all-time high of 76,795.31 while the Nifty reached a record high of 23,338.70. On Friday, Sensex surged 2,732 points or 3.69 per cent to close at 76,693.36. On the other hand, Nifty went up 759 points or 3.37 per cent to end at 23,290.

What to expect from markets this week? 

The US Fed interest rate decision, domestic inflation data, and global trends would be key driving factors in dictating movement in the market this week, as per analysts.

"The Lok Sabha elections and the RBI policy decision are settled, attention now turns to global factors. Key areas to watch include the US Fed interest rate decision, the rupee's movement against the dollar, crude oil prices, and commodity prices," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.

"Additionally, investments by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will remain under close observation," Gour added 

Globally, significant events are scheduled for June 12, 2024, including the announcement of the US core and consumer price inflation figures, alongside the US Federal Reserve's interest rate decision and Federal Open Market Committee (FOMC) economic projections, he added.

Additionally, on June 14, 2024, the Bank of Japan will announce its interest rate decision, Gour said.

"Domestically, India's economic calendar is also marked with key releases. On June 12, 2024, both India's industrial production data and inflation data will be unveiled," Gour added.

Trading activity of foreign investors would also be crucial in dictating terms in the market.

"The outlook for the market will be guided by major domestic and global economic data. India WPI inflation, China CPI inflation, UK GDP data, US CPI data, and the US Fed interest decision will guide the market this week," Arvinder Singh Nanda, Senior Vice President, Master Capital Services Ltd, said.

After the huge volatility witnessed in the market in response to the election results (both exit polls and actual results), the market is slowly stabilising, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

"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," Ajit Mishra – SVP, Research, Religare Broking Ltd, said.

(With inputs from agencies.)

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