Stock Market Outlook: 5 Key Factors, US Fed Rate Cut To FIIs Trend, To Drive BSE & NSE

Ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium, the Indian stock market indices witnessed panic driven selling, reversing the six-day trend on Friday. The BSE Sensex declined by 693 points to close at 81,306, Nifty 50 index lost 213 points ending at 24,870, Bank Nifty index fell 606 points to close at 55,149.

Meanwhile, auto majors Auto M&M, Maruti, and BEL led the charge among the Nifty's top performers. On the other hand, Grasim, Asian Paints, and Adani Enterprises, ended Friday's trading session as the major losers. Let's have a look at five cues bound to impact Indian stock market bourses next week. 

US Fed Rate Cut

Global sentiments have improved after the US Fed chief Jerome Powell's latest speech. The annual gala of the American Central Bank has heightened hopes for a US Fed rate cut in 2025, placing the US dollar rates and the US bond market under pressure.

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Global Triggers

The Indian stock market indices is expected to follow the global cues, especially the US stock market. The global market is reportedly expecting a 25 basis points (bps) US Fed rate cut, fueling the liquidity possibility on Dalal Street.

FIIs Cue

FIIs have been selling constantly in the Indian stock market, however, after the US Fed rate cut expectations rose, trend reversal in FPIs' trade pattern could occur, placing US bond yield and US dollar rates under pressure.

RBI Rate Cut

A Fed rate cut could also provide the Reserve Bank of India (RBI) with added flexibility to consider a final 25-bps rate reduction in its upcoming policy review, potentially marking the culmination of the current easing cycle.

Russia-Ukraine War

Despite the Trump-Putin and Trump-Zelensky meetings, uncertainty over the Russia-Ukraine war persists. The geopolitical tension is still around and can change the market dynamics at any time