New Delhi: Indian stock market faced a severe beat down the previous week resulting in nifty 50 and bse sensex indices droppig by 2 percent as foreign institutions continued to divest, US yields were high and there were also global issues. All of these combined heavily discouraged investors from pursuing businesses in the Indian market.

Foreign Investment Outflows Create Sell Pressure  

In January, foreign institutional investors withdrew $2.2 billion from Indian equities amid growing dollar strength and rising United States bond yields. Both of these combined underwhelming q3 earnings further increased the already present bearish outlook towards the Indian markets that is present in dalal street.

A Peninsula of Hope: IT Sector

Several investors found some way to offset their losses and recover funds from the market, because despite the downfall of the overall valuation of the market, the Nifty IT index rose by 2% during the last week. This made great sense and was expected by most investors because Tata Consultancy Services (TCS) stock climbed by 5.6% on Friday after the company forecast a revival in North American orders. As a result of all this, the Tata group became optimistic about the future.

It is predicted that in Q3 TCS will be able to have a great earnings overall which will boost the recovery of the IT Sector, as currently there is a boom in demand.

What Lies Ahead For Investors?

The Nifty and Sensex both came under pressure and finished the day off in the red as a result of the unpredictability that dominated Friday’s session. For the upcoming week, concerns about the global environment still remain and coupled with FII selling, investors are mindful about the performance of the market.

Expert Anticipation

"In the week, the domestic market channelled through rough terrain," said Vinod Nair, who is the Head of Research at Geojit Financial Services. “There are concerns that have emerged regarding the countries’s potential as the Indian economy is expected to grow 6.4 per cent for FY25. More, the third quarter company earnings estimates leave much to be desired and are further denting market sentiments. This, together with the persistent selling by FIIs because of overvaluation, especially of the broader markets, and other global factors have had a serious impact on the markets. Investor sentiment has been impacted by the steady increase in the dollar and US bond yield. On the bright side, the first few results from the IT sector were encouraging.

He continued, “Corporate profits will take center stage as big corporations, including IT companies, present their Q3 figures. Macroeconomic variables like India’s inflation and industrial output data are expected to be vital in determining the direction of the market. Meanwhile, concerning foreign institutional investment flows, information on the US economy, such as labour statistics and the trend of inflation, could have effect. The increase in crude oil prices will clearly put pressure on inflation. In general, high volatility of the markets is likely to persist as market participants respond to the array of earnings, macroeconomic statistics and global indicators.”