Inflation and US monetary policy data will influence stock markets, analysts say

Inflation data from India, the Covid-19 vaccination campaign and the resumption of economic activity after a prolonged lockdown and restrictions would guide the trend of domestic stock markets this week, analysts say.

In addition, the US central bank’s monetary policy meeting on its stance on continued stimulus measures is another factor observed by market participants.

“This week, India’s inflation data for May will be the main economic engine of the domestic market. On the global front, the Fed’s monetary policy meeting will be the center of attention as the market waits for its position on the continuation of stimulus measures, “the news agency said. PTI quoted Vinod Nair, research manager at Geojit Financial Services.

Nirali Shah, head of equity research at Samco Securities, said the US FOMC meeting will keep markets volatile.

Over the past week, the 30-stock BSE benchmark jumped 374.71 points or 0.71%. The 30-stock benchmark hit a lifetime high of 52,641.53 points on Friday.

“Investors will continue to monitor economic data and updates related to Covid-19,” said Sumeet Bagadia, executive director of Choice Broking.

“The key factors to watch are still the pace of vaccination and the reopening of the economy. We would also be attentive to trends in global liquidity and the political stance of central bankers,” said Shibani Sircar Kurian, executive vice president principal and chief executive officer. Research Associate, Kotak Mahindra Asset Management Company.

Separately, the movement of Brent crude, Rupee and Foreign Institutional Investors (FIIs) would also be watched by investors.

Shrikant Chouhan, executive vice president of technical equity research at Kotak Securities, said: “Markets should monitor the spread of the monsoon in the coming weeks, the daily number of new cases and the easing of restrictions on the monsoon. locking.”

Inflation expectations

Retail price inflation in India was 4.29% in April but is expected to increase in the coming months.

Seasonal pressure on vegetable prices is imminent. Fuel price inflation is unlikely to subside unless the government begins to reduce taxes, as they constitute a large part of the recent increase in fuel prices. The prices of raw materials are on the rise around the world.

Logically, this would lead to a tightening of monetary policy or a withdrawal of accommodations at the very least from the Reserve Bank of India (RBI). But it is unlikely to happen this time around.

QuantEco economists believe that monetary policy will this time focus on rising inflation. The main reason is that there is not enough demand for the RBI to respond.

With contributions from agencies.

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