Indian market cautious on global cues

What happened: Indian markets exhibited caution, driven by global cues, with the Federal Reserve's interest rate hike expectations being a key influencer. The BSE Sensex surged 485 points on Friday as weak U.S. jobs data raised hopes of a Fed rate hold, while it settled sharply lower on Tuesday due to global market weakness and FII selling. Indian shares opened lower on Thursday due to U.S.-Iran tensions and potential Fed rate hikes, but opened higher on Friday, buoyed by earnings and potential MSCI index rebalancing flows.

Market impact: Tech stocks were hit by global sell-offs, with the Nifty IT index falling 1.5% on Tuesday. The rupee's weakness also pressured the market. Conversely, IT stocks shone on Thursday, up 1.3%, while the broader market edged higher on Friday, with the Sensex up 1.6%. The upcoming MSCI index rebalancing could trigger about $2.3 billion in passive investment flows, benefiting the added stocks.

What to watch next: The market will closely monitor the Fed's policy decision on July 27, which could impact Indian markets. Additionally, the Q1 earnings season starting in late July will provide clarity on corporate performance. Lastly, the Reserve Bank of India's monetary policy review on August 4 may offer insights into domestic interest rate movements.