Markets to consolidate, positive bias seen

This week, we expect the Indian market to consolidate in a broad range with a positive bias. Optimism prevails in sentiments over a potential India-US trade deal, sustained institutional inflows, strong rupee and record high GST collections in April.

FII buying continued for the eleventh consecutive day till April 30, resulting in a cumulative inflow of Rs 37,375 crore during the period. This turned the net FII flows positive for April at Rs 2,700 crore. DIIs were persistent buyers of over Rs 28,000 crore during the month. The foreign fund flows along with hopes of the US-India trade deal helped the rupee to gain past the 84 mark, its highest level in seven months. 

Further, GST collections hit an all-time high to reach Rs 2.4 lakh crore in April 2025, growing 12.6% year-on-year. These positive factors are expected to support the domestic market, while some volatility may be anticipated due to geopolitical tensions. Stock/sector specific action would continue with Q4 (January-March) results from companies like Mahindra, Indian Hotels, Coforge, Godrej Consumer, BSE, HPCL, Coal India, Dabur, L&T, Titan, Asian Paints, and others this week. On the macro front, investors will watch out for interest rate decisions from the Federal Reserve and Bank of England and the Service PMI data of US and India.

Last week, Nifty 50 ended higher by 1.3% at 24,347 levels. Broader market indices were mixed with Nifty Midcap100 up 0.3%, while Smallcap100 was down by 0.6%. Amongst sectors, Nifty Realty was the top performer with gains of 2.6%, as the festival of Akshaya Tritiya which traditionally sees heightened property-buying activity, boosted sentiment for realty companies. Nifty Auto gained 1.3% as US President Donal Trump softened some of the automotive tariffs. Banking stocks witnessed modest gains after RBI’s decision to inject Rs 1.25 lakh crore worth of liquidity in May. Metals and FMCG underperformed, ending with losses of 0.5% each.

The Nifty India Defence index surged by 6% during the week as defence stocks witnessed strong buying interest amid cross border tension between India and Pakistan. Meanwhile, India signed the mega deal to purchase 26 Rafael Marine aircrafts worth around Rs 64,000 crore from France for the Indian Navy, bolstering sentiments for the defence sector. As the government boosts spending on modernizing equipment and investing in new technologies, opportunities for Indian companies in defence manufacturing are set to grow exponentially.

In the auto sector, monthly sales numbers for April suggested that tractor demand was steady, while other segments remained weak. Tractor sales momentum is likely to remain healthy, given favourable demand indicators such as expectation of above-average monsoon season this year. Passenger vehicle wholesales grew 7%, in line with expectations. Two-wheelers and commercial vehicle segments posted mixed numbers..   

On the global front, US GDP data for January-March 2025 showed a 0.3% contraction, first time in 3-years, down from 2.4% growth in October-December 2024. Brent crude declined 3% to $61/barrel after Saudi Arabia signalled a move toward producing more and expanding its market share, while the global trade war eroded the outlook for fuel demand. Global sentiment improved after US and China softened their stance on tariffs and agreed to begin negotiations, with reports suggesting that the Trump administration may soon announce the first round of trade agreements to reduce planned tariffs.

(The author is head of Research, Wealth Management, Motilal Oswal Financial Services Ltd)