New Delhi: The US-Iran conflict, FII flows and crude oil prices will be the major drivers for Dalal Street this week, with inflation adding to investor anxiety, say analysts.
Besides, the rupee’s movement, which crashed below the 96 mark against the US dollar last week, would also influence trading sentiment.
“Participants will closely monitor developments in the ongoing US-Iran conflict and their implications for crude oil prices, inflation, and global risk sentiment. Movements in energy markets and the rupee will continue to influence near-term market direction,” Ajit Mishra SVP, Research, Religare Broking Ltd, said.
The rupee crashed below the 96/USD mark on Friday amid elevated crude oil prices and inflation concerns.
“Markets are expected to remain highly volatile and intensely headline-driven, with investor sentiment continuing to hinge on developments surrounding the ongoing US-Iran conflict, diplomatic negotiations and movements in global energy markets,” Ponmudi R, CEO – Enrich Money, an online trading and wealth tech firm, said.
Markets are likely to remain extremely sensitive to any developments linked to the Strait of Hormuz, given its critical importance to global energy supply chains, he said.
“Any credible diplomatic progress or easing in tensions could trigger short-covering rallies across equities, support emerging market sentiment and help moderate crude oil prices. Conversely, any renewed escalation, disruption to shipping routes or deterioration in negotiations could rapidly revive risk-off positioning, intensify volatility and place renewed pressure on equities, currencies and commodities globally,” Ponmudi added.
Brent crude has climbed to USD 109 per barrel level.
In addition to geopolitical developments, investors will closely monitor rupee movement, institutional flow trends and global equity performance for directional cues, Ponmudi said.
Santosh Meena, Head of Research at Swastika Investmart Ltd, said, going into the week ahead, the key focus will continue to remain on geopolitical developments and the trajectory of crude oil prices.
Additionally, macroeconomic data releases from China, the US, and India, along with the minutes of the US FOMC (Federal Open Market Committee) meeting, will be closely tracked by investors, he said, adding that the tail end of the earnings season may also continue to drive stock-specific action across sectors.
IOC, BPCL, GAIL and NTPC would announce their quarterly earnings this week.
Last week, the 30-share BSE Sensex plunged 2,090.2 points, or 2.7 per cent, while the 50-share NSE Nifty declined 532.65 points, or 2.2 per cent.
