Dalal Street Outlook: RBI Policy, Global Tensions, Oil Prices, US GDP, and Earnings to Influence Market Sentiment

Market Remains Under Selling Pressure Despite RBI Measures

The Indian market continued to face severe selling pressure for the sixth consecutive week, with a decline of around half a percent for the week ended April 2. The BSE Sensex fell 264 points (0.36 percent) to 73,320, while the Nifty 50 slipped 107 points (0.47 percent) to 22,713. The Nifty Midcap 100 index was down 0.78 percent, and the Nifty Smallcap 100 index gained 0.2 percent.

Key Factors to Watch Next Week

The upcoming week is expected to remain weak, with elevated volatility until there is a concrete news development with respect to the de-escalation of the war and the opening of the Strait of Hormuz. Some of the key factors to watch next week include:

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Global Economic Data

Globally, market participants will focus on the FOMC minutes, and economic releases like weekly jobs data, quarterly GDP growth & Core PCE prices, and inflation for March from the United States. The US GDP growth for Q4-CY25 is likely to be sharply lower from 4.4 percent seen in Q3, while the inflation is expected to inch higher for March from 2.4 percent in February.

RBI Monetary Policy

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Back home, the Reserve Bank of India Monetary Policy Committee (RBI MPC) will conclude its three-day monetary policy meeting on April 8. The Governor's commentary on the rate cycle trajectory and FY27 projections will be closely monitored. Most economists expect no rate cut at least in the current financial year, but rather a possibility of a rate hike in the range of 25-50 bps considering escalated geopolitical tensions in the Middle East and elevated oil prices.

Domestic Economic Data

On the economic data front, HSBC Services PMI final data for March is scheduled on April 6. According to preliminary numbers, the services PMI dropped to 57.2 in March from 58.1 in the previous month, partly impacted by geopolitical tensions in the Middle East. Bank loan and deposit growth for the fortnight ended March 20, and foreign exchange reserves for the week ended April 3 will be released on April 10.

Indian Rupee

The movement in the rupee, which has come under pressure since the start of the West Asia conflict followed by its sharp recovery last week, will also be watched in the coming week. The currency consistently depreciated from a level of 90.50 against the US dollar in the second week of February to hit a record low of 95.225 on March 30. However, it showed a sharp recovery of 2.68 percent in the last five straight sessions, especially after the Reserve Bank of India announced several measures to restrict banks from onshore forward markets.

FII Flow

The market will also keep an eye on the mood of Foreign Institutional Investors (FIIs), which remained negative. They net sold more than Rs 29,000 crore worth shares last week, becoming consistent sellers from February 26 offloading total shares worth over Rs 1.5 lakh crore in 23 straight sessions.

IPO Action

Meanwhile, the major action is unlikely in the primary market for the second consecutive week as only two initial public offerings (IPOs) - one each in the mainboard and SME - are set to hit Dalal Street next week. Propshare Celestia's Rs 245-crore public issue will open on April 10, while the subscription for Rs 48-crore SME offer by Safety Controls & Devices will start on April 6.

Technical View

Technically, the setup remains in favor of bears as the selling pressure at higher levels remains strong than there was buying at lower levels. The Nifty 50 trading well below all key moving averages with bearish signal from momentum indicators. The recent week's low of 22,182 is expected to be immediate key support for the index, however, the 23,000 is likely to be crucial hurdle on the higher side.

Corporate Action

Here are key corporate actions taking place in the coming week:

• Tata Consultancy Services to release its quarterly numbers on April 9
• Anand Rathi Wealth and GM Breweries to release their quarterly numbers on April 9
• Propshare Celestia's Rs 245-crore public issue to open on April 10
• Safety Controls & Devices' Rs 48-crore SME offer to start on April 6
• Vivid Electromech to make its debut on April 7 after IPO