Mumbai (Maharashtra) [India], February 23 : Domestic stock markets are expected to closely monitor foreign institutional investor (FII) flows, sectoral insights from auto sales data, banking performance, updates on US tariff policies, and US Personal Consumption Expenditures (PCE) inflation data, as these factors could influence expectations regarding the US Fed's rate cut timeline, according to market observers.
Market experts say that key macro indicators like GDP growth data for the third quarter (Q3) Financial Year (FY25) and fiscal deficit numbers will provide insights into momentum of the Indian economy.
"The upcoming holiday-shortened week is expected to remain volatile due to the expiry of February's derivative contracts. Additionally, trends in foreign institutional investor (FII) flows and updates on U.S. tariff policies will be closely watched," said Ajit Mishra - SVP, Research, Religare Broking Ltd.
On the domestic front, the monthly F&O expiry on February 27 could cause short-term volatility, according to the Bajaj Broking Research Team.
"From February 24 to 28, 2025, Investors will closely monitor the US PCE inflation data, which could shape expectations around the US Fed's rate cut timeline, impacting global liquidity flows. On the domestic front, the monthly F&O expiry on February 27 may lead to short-term volatility, while key macro indicators like GDP growth data for Q3 FY25 and fiscal deficit numbers will provide insights into economic momentum," the Bajaj Broking Research Team added in its outlook commentary.
In the previous trading sessions, markets traded within a tight range and ended nearly half a per cent lower, extending the ongoing corrective phase.
With no major domestic events, the persistent foreign fund outflows and comments from the U.S. President on potential tariffs kept market sentiment subdued throughout the week.
While select pockets showed resilience, they failed to drive a meaningful recovery. As a result, both benchmark indices, Nifty and Sensex, closed near their weekly lows at 22,795.90 and 73,311.06, respectively.
On the sectoral front, a mixed trend kept participants engaged. Metals, energy, and realty outperformed, while auto, pharma, and FMCG were the top laggards. Meanwhile, broader indices--midcap and smallcap--rebounded by approximately 1.5 per cent each after a sharp decline, providing some relief.
On the benchmark front, a decisive break below 22,700 in Nifty could trigger the next leg of the downtrend, potentially dragging the index to 22,500 and then 22,000.
On the upside, a recovery would first face resistance at 23,150 (20-DEMA), and a breakout above this level could extend gains towards the next major hurdle at 23,600 (200-DEMA).