As we enter the week of February 17 to February 21, 2025, several pivotal factors are poised to influence the Indian stock market. Investors should closely monitor developments related to U.S. trade tariffs, fluctuations in the INR-USD exchange rate, movements of Foreign Institutional Investors (FIIs), and overarching global cues.
1. Impact of U.S. Trade Tariffs:President Donald Trump's recent discussions on implementing "reciprocal tariffs" have introduced uncertainty in global trade dynamics. While immediate implementation is not expected, the potential for future trade barriers could affect export-oriented sectors in India.
2. INR-USD Exchange Rate Dynamics:The Indian rupee has recently experienced significant depreciation, reaching a record low of 87.95 against the U.S. dollar. This decline is largely attributed to concerns over the newly imposed U.S. trade tariffs. In response, the Reserve Bank of India (RBI) has intervened to stabilize the currency, aiming to prevent it from breaching the 88 per dollar threshold. A weaker rupee can lead to increased import costs and may influence inflationary pressures, thereby impacting sectors reliant on imported goods and services.
3. Foreign Institutional Investors (FIIs) Activity: The apprehension surrounding global trade policies has led to a withdrawal of foreign funds from the Indian markets. FIIs have been net sellers in recent sessions, a trend that could continue if uncertainties persist. Sustained FII outflows may result in liquidity constraints and heightened volatility in the equity markets. Investors should monitor FII activity closely, as it serves as a barometer for foreign confidence in the Indian market,This month Fiis Already sold Rs 29,183 crore worth shares
4. Global Economic Indicators
Beyond trade policies, other global economic indicators are set to influence market sentiment:
U.S. Federal Reserve Policy: Any indications of changes in interest rates or monetary policy could affect global capital flows, thereby impacting Indian markets.
Crude Oil Prices: Fluctuations in oil prices can have direct implications for India's import bill and inflation rates.
Economic Data from Major Economies: Reports on economic performance from key global players, such as China and the Eurozone, can provide insights into global demand trends, which in turn affect Indian exports.
5. Release of FOMC Minutes:The Federal Open Market Committee (FOMC) is set to release the minutes from its recent meeting this week. These minutes will provide insights into the U.S. Federal Reserve's monetary policy stance, especially regarding interest rates. Any indications of a hawkish approach could lead to global market adjustments, impacting foreign investment flows into emerging markets like India
