Stock Markets This Week: WPI Inflation, Crude Oil, FII Trading Activity To Guide Movement, Say Analysts

Indian equities are set for a week of cautious trading, with investors weighing domestic inflation data against shifting global cues. Wholesale price inflation, foreign institutional investor flows, crude oil movements and geopolitical developments in West Asia are expected to shape market direction, according to analysts.

On domestic front, Investors will focus on October Wholesale Price Index and merchandise trade figures, both due on Monday. Currency movements and fluctuations in US Treasury yields will also be key determinants of foreign capital flows.

"Movements in crude oil, the dollar, US Treasury yields and FII flows will remain important determinants of market direction. The domestic economic calendar will be busy, with October WPI inflation and merchandise trade data scheduled for Monda," Ajit Mishra, senior vice president of research at Religare Broking, said.

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On the global front, market participants will monitor US retail sales figures, initial jobless claims and minutes of the Federal Open Market Committee's latest meeting for indications about the strength of the American economy and the Federal Reserve's future interest rate trajectory. Nvidia's earnings will also be closely watched for signals on technology sector valuations and the sustainability of investments in artificial intelligence.

Indian equities could extend their gradual upward movement, supported by strong domestic fundamentals, foreign investor buying and encouraging second-quarter corporate earnings, said Siddhartha Khemka, head of research, wealth management, at Motilal Oswal Financial Services. He added that investors would also track Japan's gross-domestic-product numbers, inflation readings from the UK and European Union, US economic data and developments surrounding monetary policy.

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Foreign investors have staged a significant return to Indian equities in the first half of November, investing Rs 84,290 crore after two consecutive months of net outflows. Lower crude oil prices, attractive valuations among large-cap stocks and developments in global technology markets have contributed to changing investment trends.

However, volatility in global technology stocks remains a potential headwind. Concerns over elevated artificial intelligence valuations and the sustainability of semiconductor investments could trigger further corrections on Wall Street, potentially affecting sentiment towards Indian IT stocks.

Ponmudi R, chief executive officer of Enrich Money, said movements in US Treasury yields and the dollar would remain crucial, as further strength in either could tighten global financial conditions and influence capital flows into emerging markets.

The US bond market will be another key determinant of foreign investment activity, while crude oil prices could have significant implications for India's inflation outlook and currency stability, said Hariselvan Radhakrishnan, founder and CEO of HST Wealth.

Vinod Nair, head of research at Geojit Investments, said markets would also begin assessing the Reserve Bank of India's possible response ahead of its December monetary policy review.

The BSE Sensex rose 564.43 points or 0.69% last week, while the NSE Nifty 50 gained 113.95 points or 0.45%.

With key domestic and global data releases ahead, analysts expect cautious trading, with institutional flows, crude oil prices and international cues likely to set the market's near-term direction.

(With inputs from PTI)

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