Market outlook: PMI, Fed cues to drive direction; investors eye inflation, spending trends
India’s equity markets are expected to take their direction from a mix of domestic macro data, the US Federal Reserve’s latest meeting minutes and updates on the India-US trade deal in the days ahead. Analysts also said that foreign investor activity will continue to play a major role in shaping market sentiment.Vinod Nair, head of research at Geojit Investments Ltd, was quoted by PTI as saying that the market’s next move will largely depend on indicators such as India’s PMI numbers, US jobless claims, FOMC minutes and negotiations on the trade pact with the US. He advised investors to focus on sectors with solid fundamentals and clear earnings visibility to position themselves for potential upgrades in the second half of FY26.Last week, benchmark indices posted strong gains, with the Sensex rising 1,346.5 points, or 1.62%, and the Nifty advancing 417.75 points, or 1.64%, PTI reported. Nair added that markets closed the previous week on a firm note helped by the resolution of the US government shutdown, steady domestic fundamentals, better-than-expected Q2 results and cooling inflation.Siddhartha Khemka, head of research (wealth management) at Motilal Oswal Financial Services, said that capital-market-linked stocks remained active due to robust retail participation, strong SIP inflows and interest in both recent and upcoming IPOs. He expects Indian equities to maintain their upward trend, supported by healthy earnings and political stability following the NDA’s strong mandate in Bihar.As per PTI, Khemka said attention will now shift towards broader domestic cues, including demand signals from the festive and wedding season, the interest rate outlook and the possibility of higher government spending in the latter half of the fiscal year. “The reopening of the US government and improving global risk appetite add to the supportive backdrop,” he noted. Sectors such as IT, metals and capital-market-linked names may come into focus.Ajit Mishra, SVP – research at Religare Broking Ltd, said that markets staged a sharp rebound last week after a stretch of weakness.He said investor confidence improved significantly after India’s retail inflation eased to 0.25% in October from 1.44% in September, driven by GST cuts and softer food prices.Mishra added that with earnings announcements now over, the focus will turn to high-frequency indicators, including Services PMI, forex reserves and infrastructure output. Globally, he said market mood will be shaped by key US data releases, the FOMC minutes and ongoing volatility in AI-linked stocks, which could sway broader sentiment.Movements from the previous week’s trading showed Sensex and Nifty closing marginally higher on Friday after recovering from early losses. Gains in banking, FMCG and telecom stocks supported the market, while sectors such as IT, auto and metals closed lower. Investors also remained cautious ahead of the RBI policy meeting and US Fed cues.
