The Indian markets are anticipated to begin trading on a positive note on Thursday, buoyed by encouraging domestic macroeconomic indicators. Analysts predict that positive global cues will further boost market sentiment, with expectations of continued consolidation backed by strong support at lower levels. The Nifty is indicated to open at 22,555, signaling a marginal gain. However, with a holiday tomorrow due to Holi, analysts foresee low-volume trading and potential profit-booking later in the day, as retail participation is likely to be subdued over the long weekend.
Emery Global Research’s Market Health Check report suggests that the market is showing signs of stability following a recent sharp decline, with valuation froth dissipating and improving flows at the margin. The upcoming earnings outlook and the relative stability of FY26 forecasts during the April 2025 earnings season could serve as the next trigger for the market.
In a positive development, India’s retail inflation dropped to a seven-month low of 3.61% in February 2025, driven by a decline in food inflation to 3.75%, the lowest since May 2023. This sets the stage for the RBI to consider another rate cut this year, potentially fueling economic growth. Ajay Garg, CEO of SMC Global Research, believes that the downward trend in inflation will alleviate cost pressures on companies, leading to higher consumer spending and investment. Sectors like FMCG and automobiles could benefit from increased consumer expenditure.
Furthermore, India’s industrial production saw acceleration, surpassing expectations with a growth rate of 5% in January compared to 3.5% in December. Rajani Sinha, Chief Economist at CareEdge, highlights that the growth in manufacturing and mining output supported industrial performance, while electricity growth moderated. Improvements in consumer durables output and strong performances in infrastructure, construction, and capital goods sectors are positive indicators for boosting investment sentiment and economic growth.
Devarsh Vakil, Head of Prime Research at HDFC Securities, views the combination of rapidly declining inflation and unexpected strength in industrial production as a catalyst for bullish market sentiment in the macroeconomic environment. In the global context, the lower-than-expected US inflation rate of 2.8% has raised hopes for rate cuts, although concerns about a potential recession or slowdown due to tariff wars loom over the markets, according to Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities.
