Analysts have been on unsteady footing when it comes to predicting whether the Indian stock markets will recover sharply in the coming week, especially when there’s been no good news from the global quarters.
With the ongoing conflict between Iran and Israel set to heighten, stock investors will closely track Brent crude oil prices, inflation data and the US Fed interest rate decision for further cues this week, analysts said.
Tariff-related news would also dictate trends in the equity market, they noted.
Last week, the stock markets faced heightened volatility and ended in the red amid escalating geopolitical tensions, which sparked a risk-off sentiment. Investor sentiment was hit hard on surging oil prices as fears of supply disruptions resurfaced.
On Friday, the BSE benchmark tanked 1,070.39 points or 1.30 per cent, and the Nifty declined 284.45 points or 1.13 per cent.
“Indian stock markets are likely to follow the global trend, following rising tensions in the Middle East amid the Israel-Iran conflict, which could fuel further pessimism and prompt investors to flee riskier assets. Also, traders will exercise caution ahead of the US Federal Reserve interest rate decision on Wednesday, coupled with other central banks of Japan and the UK announcing their interest rates separately,” said Ketan Vikam, Head of Sales at financial services provider Almondz Institutional Equities.
Equity benchmark indices Sensex and Nifty tumbled nearly 1 per cent on Friday closing as weak global markets and a spike in Brent crude oil prices weighed on investor sentiment.
“Looking ahead, investors are expected to remain cautious amid premium valuations and geopolitical risks. All eyes are now on the upcoming US Fed meeting... The Fed’s commentary and economic projections will be closely scrutinised for future policy cues,” opined Vinod Nair, Head of Research, Geojit Investments Limited.
In the week ahead, markets are likely to remain volatile amid ongoing geopolitical uncertainty and crucial central bank meetings, echoed Ajit Mishra, SVP, Research, Religare Broking Ltd.
“The US Federal Reserve's upcoming policy decision will be closely tracked, as market participants look for clarity on the timing and magnitude of potential rate cuts, especially in light of mixed economic signals.
Domestically, the focus will remain on the progress of monsoon, crude oil price trends, WPI inflation data, and FIIs (Foreign Institutional Investors) activity,” he said.
Markets would also track trends in global equities and movement in the rupee, analysts said.
Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, "Overall, we expect the market to remain subdued on the back of weak global cues, while industry-specific news flows would continue to drive sectoral movements."
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