The Indian stock market is poised for a week influenced by a confluence of factors, including domestic inflation data, the potential resurgence of US tariffs, the flow of foreign institutional investment (FII), and global economic cues. These elements will likely dictate market sentiment and direction.

Inflation Data: The release of India's latest inflation figures will be a key event. Key high-frequency indicators like CPI inflation will be carefully observed to assess demand patterns and anticipate the central bank's future actions. A lower-than-expected inflation rate could strengthen the case for the Reserve Bank of India (RBI) to consider further rate cuts, boosting market sentiment. Conversely, a higher-than-expected figure may temper expectations of monetary easing, potentially leading to a more cautious market approach. The Wholesale Price Index (WPI) for March will also provide insights into wholesale inflation trends, which are crucial for understanding cost pressures at the production level and could have implications for the Reserve Bank of India's future rate decisions

US Tariffs: The potential for renewed US tariffs remains a significant concern. The market will closely monitor any announcements regarding "reciprocal" duties by the US administration. While the previous blocking of Trump's tariffs by a US trade court had a positive but short-lived effect on the Indian stock market, the possibility of their reintroduction creates uncertainty. Although India's trade surplus with the US is not significantly large, and the market has seemingly discounted the possibility of a major impact from US tariffs due to ongoing trade talks, renewed tariff threats could still trigger volatility and impact specific sectors. Export-oriented sectors with significant exposure to the U.S. market were among the hardest hit. The automobile and auto components industry, for example, faced immediate pressure as tariffs threatened to reduce the competitiveness of Indian vehicles and parts in the American market.

FII Flows: Foreign Institutional Investors (FII) activity will be another critical factor. FIIs have a significant impact on market sentiment and volatility in India. A healthy inflow of FII increases the Indian capital market index. Likewise, a drop in FII flow decreases the Indian capital market index. After a period of net selling, FIIs had turned into buyers, and the sustainability of this trend will be closely watched. Continuous FII inflows can fuel market momentum, while outflows can trigger corrections. Factors influencing FII flows include global economic conditions, interest rate differentials, and overall investor sentiment towards emerging markets like India. Moreover, FIIs help impart stability to India's balance of payment. FIIs play a crucial role in shaping the course of developing or emerging economies.

Global Cues: Global cues, including economic data releases, geopolitical developments, and policy announcements by major central banks, will play a crucial role in shaping the Indian stock market's trajectory. For example, when the U.S. Federal Reserve raises interest rates, foreign investors often withdraw funds from emerging markets like India to seek safer, higher returns in the U.S., leading to a fall in Indian stock prices. Progress in trade talks and fluctuations in U.S. bond yields will also be significant factors shaping investor sentiment. Any signs of easing US-China trade tensions or strong U.S. job data can provide positive cues, while escalating geopolitical tensions or concerns about a global economic slowdown can dampen market sentiment.

Technical Outlook: From a technical perspective, the Nifty has approached the upper band of its prevailing consolidation range. A decisive breakout above 25,200 would mark the beginning of a fresh uptrend, with potential to gradually move toward the 25,600–25,800 zone. On the downside, the 24,400–24,600 range is expected to act as a strong support zone during any corrective phase. The banking index has finally broken above the key 56,000 mark after trading in a tight range for over a month. The market is expected to move toward the 58,000 level, making this segment crucial for broader market direction. In case of a dip, the 55,350–56,000 range is likely to provide strong support.

In conclusion, the Indian stock market faces a week packed with potential catalysts. Inflation data, US tariff developments, FII flows, and global cues will all contribute to shaping market sentiment and direction. Investors should closely monitor these factors and remain prepared for potential volatility.