Indian Stock Market Extends Losses Amid Global Monetary Policy Outlook

Indian stock market indices continued their downward trend from the previous week, albeit marginally, tracking weak cues from the US market and concerns about overheating in the small and midcaps space.

As of 9:19 am, soon after the opening bell, the Sensex stood at 72,585.93, down 57.50 points or 0.079%, while the Nifty was at 21,991.85 points, down 31.50 points or 0.14%. Among the Nifty 50 stocks, 21 advanced while 29 declined.

Last week marked a significant downturn for India’s benchmark stock indices, ending a four-week rally with the worst fall recorded in over four months. Looking ahead to this week, investors are closely monitoring the monetary policy outcomes of five major central banks: the Federal Reserve, the Bank of Japan (BOJ), the Reserve Bank of Australia (RBA), the Swiss National Bank (SNB), and the Bank of England (BOE). These outcomes will provide insights into the future path of interest rates in these major economies.

The March Federal Open Market Committee (FOMC) meeting is particularly crucial, as it will guide market rate expectations following the surprising climb in US equities despite higher-than-expected consumer price index (CPI) readings for February.

Market watchers are eagerly anticipating Fed Chair Jerome Powell’s comments on rate cuts and the overall health of the US economy amidst concerns of rising inflation.

Meanwhile, foreign portfolio investors (FPIs) continue to show interest in the Indian market. After turning net sellers in January 2024, FPIs became net buyers in February and March, injecting confidence into Indian stocks. So far in March alone, FPIs have bought equities worth Rs 40,710 crore, according to data from the National Securities Depository Limited (NSDL).

“The rising trend of FPI investment in India witnessed in March reflects ongoing investor confidence in the Indian market,” commented VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

However, market analysts warn of potential volatility as the Federal Reserve’s decision on interest rates approaches, which could impact investor sentiment and trading patterns.