Indian stock indices saw gains of 0.7-1.0 per cent this week, marking the longest rally in 2024. However, on Friday, caution prevailed ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole Symposium speech. The market closed mostly flat, slowly approaching previous highs. Looking ahead to next week, GDP updates from India and the US will be eagerly awaited, along with inflation readings from the US and eurozone. Central bankers worldwide are considering rate cuts in line with expected trends for the US Fed.
During the Jackson Hole Symposium, Powell hinted at the need for the US central bank to reduce interest rates as inflation aligns with targets. While no specifics were given on the rate cut, a 25 bps reduction in September is anticipated. This move is likely to be positively received by the market in the short term. The outlook will depend on the sustainment of accommodative policies and potential further rate cuts in future policies.
India’s GDP grew at an impressive 8.2 per cent in the financial year 2023-24, maintaining its status as the fastest-growing major economy. Forecasts from the Reserve Bank of India predict a 7.2 per cent GDP growth for 2024-25, with growth rates of 7.1 per cent in Q1, 7.2 per cent in Q2, 7.3 per cent in Q3, and 7.2 per cent in Q4. Various global rating agencies and multilateral organizations have raised their growth projections for India, with the IMF raising its forecast from 6.8 per cent to 7 per cent for 2024.
The Economic Survey presented in Parliament projects a real GDP growth of 6.5-7 per cent for 2024-25, acknowledging the optimistic market expectations. Real GDP growth signifies economic growth minus inflation. With India’s economy continuing to perform strongly and global economic conditions, such as rate cuts and inflation, influencing market trends, investors will be closely monitoring developments in the coming weeks.
Overall, the Indian stock market saw positive gains this week, despite caution before Jerome Powell’s speech and continued uncertainty about the extent of future rate cuts. With strong GDP growth in India and global economic factors playing a key role in market movements, investors will be closely watching for updates on inflation, rate guidance, and central bank policies in the weeks to come. Stay tuned for more economic updates and market insights as the situation evolves.
