FII activity, India-US trade deal among 7 factors that may impact D-Street action this week

Indian equity benchmarks wrapped up the week on a solid note, buoyed by strong domestic macroeconomic data and ongoing policy reforms. The Nifty gained 1.29% to settle at 24,741, while the Sensex climbed 1.13% to close at 80,710. The uptrend was broad-based, with midcap and smallcap indices outperforming, rising 1.8% and 2.5% respectively — a clear signal of rising risk appetite despite persistent global headwinds.

Investor sentiment was lifted by India’s Q1 GDP growth of 7.8%, the fastest in five quarters, reinforcing the economy’s resilience. Policy momentum also played a key role, with the GST Council's move to streamline tax slabs to 5% and 18% adding clarity and fueling optimism across cyclical sectors.

Technically, Nifty formed a bullish candle on the weekly chart, reclaiming the 20 and 50 EMAs, signaling trend reversal and strengthening momentum. RSI maintained an upward slope, while MACD sustained a bullish crossover with an expanding histogram, reinforcing positive undertones.

Here are the key factors that will likely impact the D-Street action this week:

1) Domestic data
On the domestic front, August inflation data (September 12) will be closely tracked, along with bank credit and deposit growth and forex reserves—especially given the recent underperformance of banks.

2) Global data
Globally, key U.S. data releases—including consumer inflation expectations, PPI, CPI, jobless claims, and consumer sentiment—will be critical in shaping Fed policy expectations and influencing flows.

3) India-US trade deal
Additionally, any updates on the India-U.S. trade deal could provide further support to market sentiment.

4) Technical factors
The index rebounded from a low of 24,400, slightly above the previous swing low of 24,337.5, but continues to consolidate within a triangle pattern marked by lower highs at 25,153.65 (August 21) and 24,980.75 (September 4).

“A decisive breakout above 25,000 could trigger fresh momentum, taking the index toward 25,250 and then 25,400. On the downside, the 24,280–24,400 zone offers immediate support, with stronger support at 24,150,” said Ajit Mishra, SVP-Research, at Religare Broking.

5) Crude and bullion
On the commodities front, gold rallied on dovish Fed cues, and crude oil firmed amid easing geopolitical tensions and stronger demand signals.

6) FII action
FIIs were net sellers through the week, particularly midsession, unloading equities worth approximately Rs 5,667 crore, while DIIs absorbed supply with steady inflows, providing a crucial domestic cushion, acquiring equities to the tune of Rs 13,444 crore.

7) Rupee movement
The rupee briefly touched a record low of 88.36/$ on tariff jitters, but timely RBI intervention contained volatility, stabilizing market sentiment.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)