Daijiworld Media Network- Mumbai
Mumbai, May 25: As Indian equities enter the final week of May, analysts expect market momentum to hinge on a blend of global cues, domestic macroeconomic releases, and institutional fund flows.
After a subdued week that saw the BSE Sensex slide by 609 points (0.74%) and the NSE Nifty lose 166.65 points (0.66%), investor sentiment continues to be weighed down by global uncertainties. Among the key international concerns are rising US bond yields and growing fears over America’s ballooning debt burden, which have triggered a pullback by foreign portfolio investors from emerging markets, including India.
Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, stated that the market remains cautious amid a “complex interplay” of global financial stress and domestic signals.
Macroeconomic Data:
The spotlight will be on India’s industrial output for April and the Q1 GDP numbers, both set to be released on May 28. Analysts believe these figures will offer vital clues on the post-pandemic recovery trajectory, especially in the wake of sustained government spending.
Monsoon Monitor:
With the southwest monsoon playing a critical role in agricultural output and inflation, any update on its progress will be closely watched, especially by investors with exposure to FMCG and rural-linked stocks.
Global Developments:
The release of minutes from the US Federal Reserve’s latest policy meeting, alongside movement in US-India trade talks, will keep global investors on their toes. Any signal on interest rate direction could sway foreign investment sentiment.
Corporate Earnings & Derivatives Expiry:
The final batch of Q4 earnings, with key companies like Bajaj Auto, Aurobindo Pharma, and IRCTC yet to report, will impact stock-specific movements. The monthly F&O expiry on Thursday is also expected to introduce volatility in the later half of the week.
RBI’s Record Dividend Payout:
A major domestic trigger will be the RBI’s ?2.7 lakh crore dividend to the government—27.4% higher than last year. Market experts view this as a strong fiscal support tool that could boost infrastructure and welfare spending amid global economic pressure.
"Markets are expected to remain firm with broader market participation. Macro tailwinds and a strong earnings base are likely to support overall sentiment," said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.
Despite strong domestic cues, analysts caution against excessive optimism. Foreign Institutional Investors (FIIs) have been net sellers amid rising US yields, reflecting capital rotation towards safer assets. Gaurav Garg from Lemonn Markets Desk believes that this may lead to a phase of consolidation in Indian equities.
Vinod Nair, Head of Research at Geojit Financial Services, echoed similar sentiments, noting:
“Optimism around the RBI dividend and healthy macro data is encouraging, but persistent FII outflows remain a concern. The direction of trade talks with the US and global bond trends will determine near-term movements.”
As the market navigates a high-data week with overlapping domestic and international developments, volatility could spike. Analysts advise cautious optimism, with a focus on quality stocks and sectors linked to government capex, agriculture, and domestic consumption.
With fiscal support, healthy earnings, and GDP growth optimism on one hand, and external risks and foreign fund withdrawals on the other, the coming week is set to test investor resilience and strategy.