Will the Fed Hit the Brakes? 5 Factors That Could Move Stock Markets This Week

Fed Rates: Markets remained under pressure last week as benchmarks remained in red. BSE Sensex was down by nearly 700 points or 0.94%, concluding the week at 73,828 level mark. NSE Nifty was down by over 0.62% or 138 points and ended the week below the psychological 22,400 level mark.

Sectorally, IT bore the brunt of the selloff as investors took cues from US markets signalling a potential slowdown. The tech-heavy index, Nasdaq entered the correction territory, sending shivers across D-Street, as the US remains the primary market for India's IT sector. The Nifty IT index was down by around 5% during the holiday-shortened week.

Here are 5 factors that will guide the course of D-street this week-

1.FII Selling

While foreign institutional investors (FIIs) continued their selling spree in the March month as well, the pace of selling slowed down a bit. "The trend of FII selling in India continued in early March, too. But the intensity of selling is slowly declining as valuations are becoming reasonable. This month up to 14th FIIs have sold equity for Rs 30015 crores taking the total equity selling in CY 2025 so far to Rs 142616 crores," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

In the debt category FIIs were buyers in March so far. The total buy figure for debt (general category plus VRR) stood at Rs 7029 crores in March up to 14th, Vijayakumar further added.

2.Fed Rate Cuts

While the Federal Reserve is unlikely to implement a rate cut during the upcoming meeting, fear over tariff hikes continues to loom as the end product of trade wars is more often than not inflation.

As per an economists survey by Bloomberg, the Fed will keep interest rates unchanged during the first half of the year, before implementing 2 rate cuts starting September.

Additionally, the Consumer sentiment index dropped to a nearly two-and-a-half-year low, at 57.9, down from 64.7 recorded in the previous month.

3.Trump Policy Flip-Flop

While uncertainty resulting from Trump's tariff policy continues to haunt investor sentiment, last-minute changes are adding to the overall blurry outlook. This is making investors even more risk-averse.

Earlier this month, Trump called for a one-month pause on the imposition of tariffs on the exports of Mexico and Canada. Such adjustments are making it difficult for investors to gauge the market movement ahead.

Besides Nasdaq, the S&P500 index also fell into the correction territory last week, before gaining some momentum later.

4.China Factor

Even as global markets remained under pressure, China's stock market is gaining heightened investor attention due to cheap valuations. On year-to-date basis, the Hang Seng index has surged by over 22%. The SSE composite index also witnessed a modest rise of 4.8% during the same period. The S&P BSE500 index, on the other hand, has remained under pressure, declining by nearly 10%.

"The FPI outflows from India have been mainly going into Chinese stocks which have been outperforming other markets in 2025. The recent decline in the dollar index will limit the fund flows to the US," said Vijayakumar.

5.Technical Factors

Analysts pointed out that the NSE Nifty50 index is currently trading within a narrow range, indicating a lack of clear trends. "Nifty remains in a consolidation phase, trading within a tight range of 22,250 to 22,650. A decisive breakout could drive the index towards 23,100 or higher, while a breakdown may lead to a retest of 21,800," said Ajit Mishra, SVP-research, at Religare Broking.

"The banking sector has shown resilience, but the Bank Nifty needs a strong close above its 20-day exponential moving average at 48,600 to regain strength and test the 50,000 mark. On the downside, a breach of 47,500 could trigger a sharp correction," he added.