Indian Stock Market Outlook: Key Factors to Watch on Tuesday

The Indian market ended higher Monday, lifted by IT shares after Fed Chair Jerome Powell signaled a possible rate cut in September. The BSE Sensex rose 329.06 points, or 0.40%, to finish at 81,635.91, while the NSE Nifty gained 97.65 points, or 0.39%, to settle at 24,967.75. Analysts expect the domestic market to remain positive with GST rationalization and a good monsoon season serving as catalysts.

Indian benchmark indices Sensex and Nifty closed higher Monday, lifted by IT shares after Federal Reserve Chair Jerome Powell signaled a possible rate cut in September. The BSE Sensex rose 329.06 points, or 0.40%, to finish at 81,635.91, while the NSE Nifty gained 97.65 points, or 0.39%, to settle at 24,967.75.

The rally was driven by IT shares, with Infosys, TCS, HCL Technologies, Tech Mahindra, and Tata Motors leading the gainers, advancing between 1% and 3%. The IT sector rose 2.4%, with the Nifty's top four performers all from this sector. Metal stocks also advanced, with the sector up 0.7% as a weaker dollar buoyed commodity prices.

The optimism came after Federal Reserve Chair Jerome Powell, speaking at Jackson Hole, hinted that the U.S. central bank could cut interest rates as soon as September. Lower U.S. borrowing costs make emerging-market assets, including India’s, more attractive to global investors.

However, analysts caution that the rally may be tempered by upcoming U.S. tariffs. President Donald Trump’s additional 25% levy on Indian goods is set to take effect on August 27, potentially raising duties as high as 50%. This could impact mid- and small-cap stocks more exposed to domestic demand.

Vinod Nair, Head of Research at Geojit Investments, said, "The domestic levers stay positive with the proposed GST rationalization to push consumption demand, and a good monsoon season could serve as a catalyst to navigate any uncertainty in the global trade environment." [1]

Rupak De, Senior Technical Analyst at LKP Securities, added that the Nifty fell short of the 25,000 mark but remains positive as long as the index holds above 24,800. He expects the market to trade sideways on Tuesday as traders await the final verdict on Trump’s additional tariff decision. [1]

Global markets also benefited from the Fed's rate cut hints, with Asian shares reaching multi-year highs. MSCI’s broadest index of world stocks edged up 0.1%, while Chinese blue chips surged more than 2% to their strongest level since 2022. [1]

Oil prices advanced Monday as traders weighed the risk of tighter Russian supplies amid fresh U.S. sanctions and Ukrainian strikes on energy infrastructure. Brent crude added 39 cents, or 0.6%, to $68.12 a barrel, while West Texas Intermediate rose 42 cents, or 0.7%, to $64.08. [1]

The Indian rupee closed 0.1% weaker at 87.58, slipping from 87.53 in the prior session. The U.S. dollar struggled to rebound from a four-week low, edging 0.2% higher to $1.1699 per euro in Asian trading. [1]

Analysts expect the domestic market to remain positive with GST rationalization and a good monsoon season serving as catalysts. However, concerns regarding upcoming U.S. tariffs may temper gains.

References:
[1] https://m.economictimes.com/markets/stocks/news/market-wrap-sensex-climbs-329-points-nifty-nears-25000-as-it-stocks-rally-on-fed-rate-cut-hints/articleshow/123501126.cms