Equity markets witnessed broad-based selling pressure on Friday following the IMD's monsoon forecasts of 90% of the long-period average (LPA), raising concerns among investors. The prospect of deficient rainfall, coupled with the increasing likelihood of an El Niño weather pattern, has heightened fears of elevated food inflation in the coming months. However, the downside risk appears partially mitigated by the recent moderation in crude oil prices and bond yields. Additionally, global sentiment remains supported by expectations of a potential diplomatic breakthrough between the US and Iran, which has contributed to a rally in international markets.
Analysts say that in the near term, investor attention is expected to shift toward key domestic triggers, particularly the upcoming RBI monetary policy decision and GDP data release, which will provide further insights into the inflation trajectory and overall economic momentum.
