Market focus shifts to macroeconomic indicators and FII inflows as key triggers remain absent

Mumbai (Maharashtra) [India], December 8 : In the absence of any major triggers in the stock market, the participants will keenly have their eyes on the macroeconomic indicators like IIP and CPI inflation, starting Monday, as per market analysts.
According to the analysts, the investors and traders will also be watchful of the trend of Foreign Institutional Investor (FII) inflows, following their recent buying spree.
"With no major events on the horizon, market attention is expected to turn towards macroeconomic indicators like IIP and CPI inflation. The RBI governor highlighted the critical need to manage inflation in his recent speech, suggesting that a potential easing of inflation, coupled with continued sluggishness in GDP growth, could create room for a rate cut in the next policy meeting," said Ajit Mishra--SVP, Research, Religare Broking Ltd.
He added that the trend of FII inflows, following their recent buying spree, will remain a key focal point for market participants.
Anticipating the market's sentiment for the upcoming week, Manish Goel, Founder and MD, Equentis Wealth Advisory Services Ltd, also pointed out the CPI data, which could impact the move of market participants.
Goel added," India's November CPI data is set to release on December 12; attention is focused on October's inflation rate of 6.21 percent, the highest in over a year. The surge was primarily driven by rising food and vegetable prices, adding pressure on the economy. This has sparked keen interest in upcoming data to determine whether inflationary trends are easing or persisting, influencing expectations for key sectors and market sentiment."
According to Goel, the government formation in Maharashtra is expected to drive economic growth, particularly in infrastructure, real estate, finance, and renewable energy, with policy stability under the Mahayuti alliance fostering a positive market outlook.
As per Goyal, the RBI's move of maintaining the repo rate at 6.50 percent and reducing the CRR by 50 basis points to 4 percent will impact the investor's sentiment, as the move is expected to inject liquidity into the system.
"The revision of GDP and inflation forecasts signals a more guarded outlook, while higher returns on foreign currency non-resident (bank) deposits and increased agricultural loan limits are set to attract foreign investments and bolster domestic stability," he added.
Markets in the last trading week extended their recovery for the third consecutive week, gaining over 2 percent amid mixed cues.
The sentiment turned positive early on, as weaker-than-expected GDP data raised hopes for RBI intervention, which materialised with a 50-basis-point CRR cut during the policy meet, while the repo rate remained unchanged.
Additionally, renewed buying by FIIs, following a prolonged period of selling, further bolstered market confidence, as per the experts.
FII outflows reduced to Rs182 billion (USD 2.2 billion) in November, a sharp drop from Rs919 billion (USD 10.9 billion) in October. Interestingly, the month showcased a tale of two halves.
While FIIs remained net sellers in the first half of November, with outflows of Rs195 billion (USD 2.3 billion), they turned net buyers in the second half, bringing in Rs13 billion (USD 159 million).
All major sectors contributed to the rally, with realty, metal, IT, and banking emerging as top gainers, while FMCG underperformed.
The broader indices also impressed, as both midcap and smallcap indices surged over 4 percent, surprising market participants.