Markets Ahead: Q4 Earnings, GDP Data, Geopolitical Developments To Influence Sentiment In Traders

On May 28, the government is set to release industrial and manufacturing production numbers for April, alongside the GDP figures for the first quarter.

On the domestic front, the earnings season continues with companies like Bajaj Auto, Aurobindo Pharma, and IRCTC scheduled to announce their quarterly results.

Source : ABPLIVE AI

The Indian equity market enters a crucial week, with investors eyeing a series of domestic macroeconomic indicators, global developments, and foreign investor activity to determine the trajectory ahead.

After ending the previous week on a cautious note, market sentiment remains fragile, shaped by both international and local dynamics.

In the week gone by, the BSE Sensex declined by 609.51 points or 0.74 per cent, while the NSE Nifty shed 166.65 points or 0.66 per cent. This muted performance came against the backdrop of global economic concerns, particularly surrounding the US economy.

According to Ajit Mishra, SVP, Research, Religare Broking Ltd, “Rising US bond yields and concerns over the United States’ mounting debt burden triggered foreign portfolio outflows, putting pressure on emerging markets, including India," reported PTI.

Key Economic Releases and Monsoon Progress to Shape Sentiment

Looking ahead, the spotlight will be on critical economic data due this week. On May 28, the government is set to release industrial and manufacturing production numbers for April, alongside the GDP figures for the first quarter. These metrics are expected to provide insights into the pace and strength of India's ongoing recovery. Market participants will also keep a close watch on the monsoon's progress, which remains a vital factor for India’s agrarian economy.

“Developments in the US bond market, the release of FOMC (Federal Open Market Committee) minutes, and progress in the India-US trade negotiations will continue to influence market sentiment,” Mishra added.

On the domestic front, the earnings season continues with companies like Bajaj Auto, Aurobindo Pharma, and IRCTC scheduled to announce their quarterly results. Additionally, the monthly expiry of May’s derivatives contracts could bring added volatility to the markets.

RBI’s Record Dividend Transfer Fuels Fiscal Optimism

Adding a positive dimension to the outlook is the Reserve Bank of India's announcement on Friday of a record dividend payout of Rs 2.69 lakh crore to the central government for FY25—an increase of 27.4 per cent compared to the previous year. Analysts believe this move could significantly bolster the government’s fiscal position at a time of rising defence spending and external trade challenges.

“In the week ahead, market participants will first react to the RBI’s record dividend transfer of Rs 2.7 lakh crore to the government and its implications for fiscal policy,” said Mishra.

Echoing similar views, Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, noted, “Investors will also be closely watching key data releases this week, including quarterly GDP figures for both India and the US.”

Consolidation Likely as Global Uncertainty Persists

With ongoing concerns around the fiscal health of the US and cautious foreign investor sentiment, some analysts anticipate that Indian equities may enter a consolidation phase. Gaurav Garg, Analyst at Lemonn Markets Desk, commented, “Given the continued uncertainty surrounding the US economy, foreign investment flows, and trade negotiations, Indian markets may see a phase of consolidation in the near term.”

Vinod Nair, Head of Research at Geojit Financial Services, added that while global worries persist, “Investor attention is further revolving around US-India trade talks and strong domestic macroeconomic indicators.” However, he also warned that recent foreign institutional investor (FII) outflows could continue to weigh on the markets. “Optimism around a potentially record-high dividend from the RBI is boosting hopes for fiscal consolidation, reflected in falling Indian bond yields,” Nair added.

As investors navigate the week, the interplay between domestic economic signals and international risk factors is expected to dictate the course for equities in the short term.