Indian equity markets remained volatile and under pressure during the week
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Developments in the West Asia conflict, crude oil prices, and US inflation data would be the major drivers for the stock market next week, according to analysts.
Besides, trading activities of foreign investors and global market trends will also influence domestic equities.
"This week is expected to remain highly sensitive to global monetary policy, crude oil prices and geopolitical developments. Investors will closely monitor the impact of the stronger-than-expected US employment data on expectations regarding the Federal Reserve's September policy decision," Ajit Mishra – SVP, Research, Religare Broking Ltd, said.
On the domestic front, investors will continue to monitor foreign institutional flows, the rupee, crude oil prices and domestic liquidity, he added.
"Developments around the Strait of Hormuz will also remain a critical monitorable given their implications for India's inflation, external balance and corporate profitability," Mishra noted.
Brent crude gained more than 8 per cent during the week, while WTI crude rose over 9 per cent, as renewed US-Iran hostilities and concerns surrounding the Strait of Hormuz increased the geopolitical risk premium in global energy markets, Ponmudi R, CEO – Enrich Money, an online trading and wealth tech firm, said.
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"With the latest US jobs data coming in stronger-than-expected and pointing to resilient underlying economic momentum, attention now shifts to the upcoming US inflation data, which could prove critical in shaping expectations for Federal Reserve policy and global market sentiment.
"The direction of Treasury yields and interest-rate expectations will remain closely intertwined with the inflation narrative, while elevated oil prices amid the unresolved Middle East conflict are likely to remain a persistent overhang on market sentiment," Hariselvan Radhakrishnan, founder and CEO of HST Wealth, a Research Analyst firm, said.
Last week, the 30-share BSE Sensex declined 749.08 points, or 0.96 per cent, while the 50-share NSE Nifty fell 277.95 points, or 1.14 per cent.
"Indian equity markets remained volatile and under pressure during the week, with the Nifty-50 extending its losing streak to four consecutive weeks, the longest such stretch in five months, as intensifying US-Iran hostilities drove a sharp surge in crude oil prices and kept risk sentiment firmly on edge," Ponmudi said.
Global markets enter the week facing a familiar set of challenges, with the outlook hinging on US monetary-policy expectations, elevated crude oil prices and the evolving geopolitical situation in West Asia, he added.
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