Here are the key triggers for market over next six months: Budget, US Elections and more

The year 2024 has not been upbeat for equity markets with the benchmark Nifty 50 and the Sensex gaining just 2.5% and 1.5%, respectively. The Lok Sabha elections were a significant event for market participants, with much anticipation surrounding the outcome. Now that the election results are known, the focus shifts to the next major factors that could influence the market. Here’s a key look at the triggers that market participants will be monitoring over the next six months:

1. RBI Monetary policies: The Reserve Bank of India’s monetary policies usually tend to align with global central banks. Whether the RBI would wait for the US Fed to initiate the first interest rate cut or will it begin cutting rates even before the US central bank takes action would be something to wait and watch for. A cut in rates is believed to be market-friendly and is expected to spur economic growth. The meeting of the monetary policy committee of the RBI, the first one after the election, is currently underway and will end on June 7, 2024.
2. Budget: With the elections scheduled in April-May 2024, India witnessed a vote on account in February with the main budget scheduled to be presented in July 2024. Budgets have always been a key trigger for the market, with market participants eyeing fiscal numbers, taxation laws, reforms etc. The upcoming budget will be a key event, especially at a time when the BJP failed to garner a clear majority.
3. US Elections: The year 2024 is a politically important year for the markets given the fact that two elections will take place. The US elections will be a key event that will decide what policies are to be expected in the world’s largest economy. It would be some of these key policy decisions that will eventually determine fund flows and foreign investor decisions on emerging markets.
4. US interest rates: The Federal Reserve has shown immense skepticism on inflation given the fact that since January, price rises have not supported a case for rate cuts in the near term. Economic data over the next few months would be crucial in determining whether the Federal Reserve would stick with higher-for-longer interest rates or will the year 2024 witness a rate cut. If interest rate cuts do materialise, it is expected to bring in more fund flows into emerging markets. This is crucial given the fact that foreign institutional investors have been net sellers of Indian equities in four out of five months in 2024.