Market Outlook: A Week of Critical Indicators

As the new year unfolds, domestic stock markets are poised to focus on a myriad of factors that could sway investor sentiment. Among these, corporate earnings, foreign portfolio investment (FPI) trends, and key economic indicators such as Fiscal Year GDP Growth and the Index of Industrial Production (IIP) are set to take center stage.

Market experts are also keenly awaiting the outcome of US National Security Adviser Jake Sullivan’s visit, scheduled for 5-6 January. This visit aims to co-chair the review of the Initiative on Critical and Emerging Technology (iCET), potentially bolstering strategic ties between the US and India by fostering innovation, encouraging investments, and advancing India’s technology and infrastructure sectors.

Q3 Earnings and GDP Figures in Focus

Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd., highlighted the significance of the upcoming earnings season. "The earnings season kicks off with IT major TCS, a key trigger as any signs of improvement in Q3 numbers could reverse the ongoing trend of FII outflows," Mishra stated. Additionally, a host of economic data, including HSBC Composite PMI, HSBC Services PMI, Fiscal Year GDP Growth, and IIP, will be closely monitored for further cues.

Manish Goel, Founder and Director of Equentis Wealth Advisory Services, emphasized the importance of the upcoming GDP data. The release of the First Advance Estimates of Annual GDP for FY 2024-25 on January 7, 2025, is anticipated to provide crucial insights into the economic outlook, potentially impacting market sentiment and expectations ahead of the Union Budget.

FPI Trends: A Cautious Start to the Year

Foreign Portfolio Investors (FPIs) began the year cautiously, recording a net equity outflow of Rs 4,285 crore in the first three trading sessions. Despite a weak start, December data showed net positive FPI investments in equities at Rs 15,446 crore. However, for 2024 as a whole, net FPI buying in equities was subdued at Rs 427 crore.

Markets Begin 2025 on a Positive Note

The stock markets opened 2025 with modest gains, with benchmark indices rising nearly 1 per cent despite periods of volatility. Sectoral performance was mixed, with the auto, FMCG, and energy sectors emerging as top gainers, while the realty and banking sectors ended in the red.