Last week, investors witnessed a mixed bag of performances as Indian stocks navigated through a series of challenges. Disappointing earnings reports from leading players in the financial and consumer goods sectors weighed on market sentiment. However, Oil and gas sector and technology shares rose. The Reserve Bank of India's steadfast commitment to maintaining its policy stance aimed at reining in inflation and steering it back to the targeted 4⁒ level. The RBI left the Repo Rate unchanged at 6.50⁒ at its last monetary policy meeting for the current financial year on Thursday.

On Monday, India will announce its January inflation figures, and on Tuesday, the United States will do the same. Investors will use both releases as more clues about interest rates.

Domestic Markets Last Week

Stocks fell for the week, dragged down by financial and consumer goods shares after poor results from top companies in the sector. Nifty Fin and Nifty FMCG index fell by 1.13⁒ and 2.27⁒ each for the week. However, technology and oil & gas shares were up for the week. Investors viewed the dwindling possibility of early rate cuts in India and the US, which led to quiet trading in the stock markets.

Government bond yields were marginally up last week as the central bank didn't do much to boost hopes of early rate cuts. The Reserve Bank of India at its last monetary policy for the current fiscal year kept key rates unchanged and maintained its policy stance of bringing inflation back to the 4⁒ target.

The rupee weakened against the dollar by 0.1⁒ for the week. On Friday, the rupee ended down after dollar demand from importers, notably domestic oil companies. Crude oil prices increased on Thursday due to rising concerns about conflicts in West Asia.

Global Markets Last Week:

US stocks posted their sixth consecutive weekly gains led by technology shares on positive earning reports. The S&P500 benchmark index finished over 5,000 for the first time on Friday, and Nasdaq briefly traded above 16,000, thanks to gains from mega-caps and chip firms, notably Nvidia. The excitement surrounding artificial intelligence and positive results had propelled the benchmark indices.

Treasury yields recovered from a brief fall on Friday following a small revision to inflation data from late last year. The two-year yields touched an almost two-month high, and the 10-year yields have touched their highest level since January 25. Recent hawkish remarks from policymakers and strong economic indicators have shattered expectations that the Federal Reserve will begin reducing interest rates in March.

The US dollar weakened on Friday but continued its winning streak for the fourth week in a row as investors hedged their bets on the timing of the US Federal Reserve's interest rate cuts. According to the annual adjustments provided by the Labour Department, the consumer price index rose a little more than previously thought in October and November.

Corporate Bonds

Secondary Market

Yields rose by 5 basis points across tenures for corporate bonds, mirroring government bond yields for the week. Yields went up this week after the RBI dashed the hopes of market participants on the change in its policy stance. Mutual funds were trading actively while some insurance companies turned buyers for long-term papers.

Outlook For This Week

Domestic shares may open range-bound on Monday and will take further cues from January retail inflation data. Government bonds and the foreign exchange markets will track domestic inflation numbers on Monday, followed by the US inflation data, which will be released on Tuesday.

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