India-Pakistan ceasefire, FPI stance to guide Dalal Street

MUMBAI: The continuation of the ceasefire between India and Pakistan that already looks fragile, foreign fund flows, quarterly numbers from several top corporates and the trend in the US market are expected to decide the trading trend on Dalal Street in the new week, market players said.

After US President Donald Trump said that India and Pakistan have announced a ceasefire post their recent conflict, market players were enthused by the prospect of a rally on Monday. However, things already look fragile with India accusing Pakistan of violating it within hours of its imposition on Friday evening. Market players said the continuation of the ceasefire would reduce volatility in the market in the new week.

Trading trend by foreign funds would also have an impact on investor sentiment on Dalal Street. After remaining net buyers of domestic stocks for more than three straight weeks, on Friday foreign portfolio investors (FPIs) turned net sellers again. In case FPIs continue to be net sellers in the market, that could have a negative impact on the market and could pull down the leading indices, market players said. Along with this, the strength of the Indian rupee would also have some impact on investor sentiment, dealers said.

A host of top companies are set to announce their quarterly results this week. The list includes Cipla, Lupin, Hyundai Motors, ITC Hotels and Divi's Labs. The quality of the numbers and the management commentary from these companies would have some effect on the stock market in general and on these stocks in particular. In addition to these factors, trading trend in the US markets could also have some impact on how Dalal Street treads in the new week, market players said.

The week will also see inflation numbers being announced by the govt. Although these numbers are currently in the RBI's comfort zone and there are signs that these would not start moving northward in the short term, still analysts, economists and strategists would be closely tracking these numbers.

Exports y-o-y data on May 15 will shed light on the health of India's external trade. Any adverse geopolitical development in Europe and West Asia could also weigh on investor sentiment, market players said.

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