Week Ahead: India Q3 GDP, F&O Expiry, and Global Cues to Drive Market
The Indian stock market is set for a crucial week, with key economic data releases, the expiry of February's derivative contracts, and global cues expected to influence market trends. After a corrective phase, investors will be closely watching for triggers that could lead to a recovery.
Key Market Triggers
Several factors will dictate the Indian stock market's direction in the coming week:
- India Q3 GDP Data: The release of GDP data for the third quarter of FY25 is scheduled for Friday, February 28. Analysts project a deceleration in GDP growth to around 6.4%, raising concerns about corporate profitability and economic stability.
- F&O Expiry: The scheduled expiry of February's derivative contracts is likely to add to market volatility.
- Trump Tariffs: Announcements related to trade tariffs by the US President could impact market sentiment.
- INR-USD Rate: Fluctuations in the rupee-dollar exchange rate will be closely monitored.
- FII/FPI Fund Movement: Foreign fund outflows have been a persistent concern, and their trend will be crucial.
- Global Cues: Global macroeconomic data and market cues will also play a significant role.
Recent Market Performance
The Indian stock market has been trading within a tight range, extending its corrective phase. Both the Sensex and Nifty 50 closed near their weekly lows, dragged down by auto, banking, and pharma stocks. However, midcap and smallcap indices rebounded by approximately 1.5% each after a sharp decline, offering some relief.
Foreign Fund Outflows and Corporate Earnings
Persistent foreign fund outflows and concerns over potential tariffs have kept market sentiment subdued. India's corporate earnings have remained under pressure, with Nifty 50 companies reporting modest 5% growth in the October-December quarter of FY25.
Expert Insights
"India is currently lagging behind its Asian peers on high outflows. The "sell India, buy China" strategy yields returns. The market's mood is cautious, with pessimistic sentiments likely to linger until corporate earnings improve markedly and a conducive environment with easy global liquidity and stabilised currency emerges," said Vinod Nair, Head of Research, Geojit Financial Services.
Primary Market Activity
This week, the primary market will witness a softer trend, with a few IPOs and listings slated across the mainboard and SME segments.
Global Economic Data
The week is set to be dynamic for global markets, driven by key macroeconomic data releases. Market sentiment will be shaped by GDP, Housing, inflation, infrastructure, and core PCE data.
- US New Home Sales data will be released on Wednesday, February 26.
- The US GDP Growth Rate (QoQ) Second Estimates for Q4 will be released on Thursday, February 27.
FII Activity
Foreign investor sentiment remains weak, with significant outflows from foreign institutional investors (FII) since the market peak in September. Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted that the massive selling has resulted in the Nifty yielding negative returns of four per cent YTD.
Technical Outlook
Technically, a decisive break below 22,700 in the Nifty 50 could trigger the next leg of the downtrend, potentially dragging the index to 22,500 and then 22,000.
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