Indian Stock Market Sustains Optimistic Outlook as RBI Adjusts Growth Forecast
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Mumbai, Dec 7 (NationPress) In light of a favorable shift from foreign institutional investors (FIIs) towards India, the Indian stock market has maintained a positive outlook throughout the week, powered by the core sector output in October along with stability in service PMI data, indicating signs of recovery, experts stated on Saturday.
FIIs returning to India, anticipating a dovish monetary policy from the Reserve Bank of India (RBI), have also bolstered market sentiment.
“RBI has become more pragmatic with a revision of its growth forecast for FY25. By easing liquidity in the financial system through a 50 bps reduction in CRR, the RBI emphasizes the importance of maintaining macroeconomic stability,” remarked Vinod Nair, Head of Research at Geojit Financial Services.
The market concluded flat on Friday, with the Sensex settling at 81,709.12 and Nifty ending at 24,677.80. Nifty remains stable above the significant 24,650 support level.
“The primary trend remains positive, as Nifty trades close to the upper boundary of the Donchian Channel, which is on an upward trajectory—indicating potential bullish momentum,” stated Om Mehra, Technical Analyst at SAMCO Securities.
Moreover, India's volatility index (VIX) remains low, staying beneath the 15 mark, indicating a decrease in volatility and reduced market anxiety.
Investors are actively accumulating momentum stocks, expecting that the anticipated increase in government capex will provide momentum for the infrastructure, capital goods, real estate, cement, and metal sectors in the latter half of this fiscal year.
PSU banks have outperformed due to a liquidity boost from the RBI. The outlook for the upcoming February monetary policy meeting has also turned optimistic, as inflation is expected to ease in Q4, supported by seasonal corrections in vegetable prices, kharif harvest arrivals, and anticipated rabi output, according to market analysts.
Despite a slight rise, inflation is likely to remain manageable. Factors such as soil moisture content, reservoir levels, and seasonal winter vegetable price corrections suggest a declining trend in food inflation, a point of concern, stated Siddarth Bhamre, Head of Institutional Research at Asit C Mehta Investment Intermediates Ltd.
As for the coming week, market direction will be shaped by the release of US payroll and US CPI inflation data, which will offer insights into the Fed’s December meeting.
