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The domestic stock market is expected to take cues from developments in the US-Iran peace process, crude oil prices and foreign institutional investor (FII) activity during the holiday-shortened week ahead, analysts said.

 

Investor focus will remain on technical-level talks between the United States and Iran scheduled in Burgenstock, Switzerland, on Sunday, amid concerns over instability in West Asia and its potential impact on global energy markets.

 

Markets will remain closed on Friday on account of Muharram.

 

Analysts said movements in crude oil prices would remain crucial for Indian equities. Stable oil prices could support India's macroeconomic outlook, while any escalation in regional tensions may trigger fresh volatility in financial markets.

 

“Investor attention in the week ahead is likely to remain firmly focused on developments surrounding the US-Iran peace process. Crude oil prices will remain a key variable, with continued stability supporting India's macroeconomic outlook, while any deterioration in Middle East relations could reignite volatility,” said Ponmudi R, CEO of Enrich Money.

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Apart from geopolitical developments, investors will also monitor the progress of the southwest monsoon and its implications for the economy and rural demand.

 

According to Vinod Nair, Head of Research at Geojit Investments Limited, markets are likely to adopt a cautious approach, although sentiment has improved as concerns over tariffs and geopolitical tensions begin to ease.

 

“Looking ahead, a wait-and-watch stance is likely to prevail even as the underlying bias turns incrementally positive. India appears to be gradually moving past two major headwinds, tariff-related uncertainty and geopolitical tensions, which should support valuation recovery after an extended period of consolidation,” Nair said.

 

Indian equity markets extended their gains last week, aided by easing geopolitical concerns, softer crude oil prices and improving global risk appetite.

 

The BSE Sensex rose 1,274.95 points, or 1.68 per cent, during the week, reflecting renewed investor confidence amid improving domestic and global conditions.