MUMBAI: The trading pattern of foreign fund managers, developments on India-US trade deal, direction of the rupee-dollar exchange rate after Moody’s downgrade of US’s credit rating on Saturday, and quarterly numbers from large corporates will dictate the direction of the domestic market in the new week.The previous week saw a strong rally in largecap stocks and an even stronger one in midcap and smallcap stocks. The sensex rallied about 3.6% to close the week at 82,331 points, while the Nifty added 4.2% to settle at 25,020 points. The week also saw BSE’s smallcap index gain 9.2%, while the midcap index was up 6.9%.Over the weekend, US President Donald Trump repeated that India and the US will soon have a trade deal that will allow zero-tariff trades for some commodities. Market players are keenly watching developments on that front.

Can rally sustain?

In addition, investors will continue to monitor foreign capital flows that played a significant role in sustaining the current rally, said Ajit Mishra of Religare Broking. Trading trends by domestic funds will also be watched, others said.Last week, foreign funds net bought Indian stocks worth about Rs 15,000 crore, while domestic funds net infused Rs 9,557 crore, data from BSE and NSDL showed.According to Vinod Nair of Geojit Investments, market players will look at the potential resolution of other major geopolitical conflicts and easing trade disruptions, which could further support global equity markets. “Both FIIs and DIIs have been consistently buying into the market, reinforcing the upward trajectory. Global investors displayed a heightened risk appetite, shifting capital away from traditional safe-haven assets such as gold and US treasuries, reflecting a renewed sense of market confidence.”Market players are also looking at sector and stock-specific plays. According to Mishra, with all major sectors participating in the rally on a rotational basis, stock selection based on a favourable risk-reward profile remains critical.“In particular, thematic plays like defence and railways, which have shown exceptional performance in recent weeks, may continue to offer opportunities.” The week is set to see some of the large corporates announce their quarterly numbers, which in turn could lead to some traction in those stocks. This week, among others, ONGC, ITC, Hindalco, JSW Steel, and Power Grid are set to announce their Jan-March quarterly results.Market players would also watch out for any impact of Moody’s ratings downgrade of the US, the last major ratings agency to do this for the world’s largest economy.