Week Ahead: Inflation data, FII flow, Trump tariffs, global cues among key triggers for Indian stock market

The Indian stock market snapped its three-week losing streak and staged a sharp recovery, driven by favorable global and domestic cues amid US tariff-related developments, instilling fresh confidence among D-Street investors.

Next, investors will monitor some key market triggers in the second week of March. Retail inflation, Donald Trump’s tariff announcements, the rupee-dollar rate, foreign fund outflow, domestic and global macroeconomic data, and global market cues will dictate the market direction in the next five days.

Also Read: Nifty 50 logs best week in 3 months, valuations hit multi-year lows: Bear case scenarios point to THESE year-end levels

Domestic equity benchmarks Sensex and Nifty 50 marked a smart rebound, primarily driven by short covering, as the indices approached critical support levels, prompting investors and traders to unwind their bearish positions. 

The Nifty 50 rose 1.9 per cent this week, its best in three months, while the Sensex gained 1.6 per cent and logged its highest weekly gains since January-end. The broader market exhibited resilience, with the small-cap and mid-cap indices gaining approximately 5.5 per cent and 2.6 per cent, respectively.

The domestic market recovered from its oversold levels; however, a decisive upward momentum will be based on the recovery in corporate earnings and an ease in tariffs uncertainty. The premium valuation of broader indices may restrict a broad-based market recovery in the short run, while large caps appear attractive,” said Vinod Nair, Head of Research, Geojit Financial Services.

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This week, the primary market will witness a subdued trend with hardly any new initial public offerings (IPO), and listings slated across the mainboard and small and medium enterprises (SME) segments. The holiday-shortened week will be critical from the domestic and technical point of view. Investors will track domestic and global macroeconomic data, along with currency and commodities.

Here are the key triggers for stock markets in the coming week:

Inflation Data

On the macroeconomic front, the release of the consumer price index (CPI) inflation data and the index of industrial production (IIP) will be closely tracked. According to the Union Bank of India, food inflation likely fell below five per cent for the first time since June 2023. The bank also noted that India’s retail inflation likely slowed down further in February 2025, falling below the four per cent mark, primarily due to a decline in vegetable prices.

2 new IPOs, 1 new listing to hit D-Street

No new issues are listed for opening in the mainboard segment. Two new issues will open for subscription in the SME segmentthis week. Among listings, one new SME will debut on either BSE SME or NSE SME this week.
 

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FII Activity

On the institutional front, foreign institutional investors (FIIs) recorded net outflows of ₹15,501 crore in the cash segment, whereas domestic institutional investors (DIIs) injected ₹20,950 crore, offering stability to the market.

“The trend of FII selling in India continued in early March, too. But there are signs of a slight decline in the intensifying in the last couple of days,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Chinese stocks reported buying, triggered by attractive valuations and expectations from the recent positive initiatives by the Chinese government towards their big businesses. This is more likely to be a short-term cyclical trade since Chinese corporate earnings have continuously disappointed since 2008.

Also Read: FPI Exodus: Financials, FMCG, Auto sectors lead outflows in February; Telecom, IT stocks buck the trend

According to Vaibhav Porwal, Co-Founder of Dezerv, the FII outflows signal all-around selling, with FIIs consistently offloading significant amounts over the past six months. India is undergoing a market correction, with all major equity indices falling by approximately 11–25 per cent. 

US bonds offer attractive yields without the volatility or currency risk associated with emerging market equities. US interest rates have risen.

The three per cent rupee depreciation has eroded returns for FIIs…”These factors may have incentivized FIIs to allocate funds where they find valuation comfort. It prompted them to reallocate investments to markets offering potentially better returns, such as China, US, Brazil,” said Porwal.

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Global Cues

Global sentiment improved following reports of a delay in US tariffs and the possibility of further negotiations, which helped stabilize financial markets. A weaker US dollar and a decline in crude oil prices further boosted investor confidence. 

In the coming week, key factors to watch for investors include fresh updates on the ongoing tariff negotiations, geopolitical tensions, and their impact on the movement of the US dollar and international crude oil prices.

“A fall in the dollar index also sweetened investor sentiment towards emerging markets, while the US equity markets have declined due to uncertainty over Trump’s economic policies,” said Vinod Nair of Geojit.

“On the tariffs front, the long-awaited tariffs were enacted but later backtracked by delaying their implementation, creating uncertainty among investors. Investors will closely monitor payroll data and US inflation to get cues on interest rates,” added Nair.

Oil Prices

International crude oil prices rose in the previous session but retreated from their session highs after US President Donald Trump threatened sanctions on Russia if it fails to reach a cease-fire with Ukraine. The prospect of a temporary truce in Ukraine capped tariff news that upended global markets.

Brent crude futures settled at $70.36 a barrel, up 90 cents, or 1.3 per cent. US West Texas Intermediate (WTI) futures finished at $67.04, up 68 cents, or 1.02 per cent. For the week, Brent was down 3.8 per cent, its biggest weekly decline since the week of November 11, almost four months. US WTI finished down 3.9 per cent, its biggest weekly drop since the week of January 21.

Corporate Action

Shares of Bharat Electronics Ltd, G R Infraprojects Ltd, Housing & Urban Development Corporation Ltd, among others will trade ex-dividend next week, starting from Monday, March 11. A few stocks will also trade ex-split and ex-bonus this week.

Technical View

From a technical perspective, Nifty 50 faces a crucial hurdle at its 20-day Exponential Moving Average (DEMA) near 22,700. A close below 22,250 may stall recovery, leading to a retest of the support zone near 22,000. Read full technical analysis here

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.