After ending lower for the seventh consecutive week, the Indian stock market is likely to take cues from crude oil prices, global bond yields, foreign fund flows, geopolitical developments in the Middle East, and key US economic data releases in the coming week.
Market sentiment remained subdued through most of the week, with indices trading in a narrow range during the initial sessions. However, a sharp sell-off on Thursday weighed heavily on investor confidence before value buying in select blue-chip stocks helped the market recover on Friday.
The Sensex rose 315.20 points, or 0.43 per cent, to close at 73,895.74 on Friday, while the Nifty gained 77.40 points, or 0.34 per cent, to settle at 23,140.50. Buying interest was seen in banking, oil and gas, and automobile stocks after the recent correction pushed several large-cap counters to attractive valuations.
Going into the new week, crude oil prices are expected to remain one of the most important triggers for the equity market. With Brent crude continuing to hover above the $100-per-barrel level, concerns over inflationary pressures, higher import costs and pressure on corporate margins remain elevated.
However, the recent easing in oil prices has provided some relief to investors. Market participants will closely monitor crude price movements as any fresh escalation in geopolitical tensions could once again drive prices higher.
Global bond yields will also be closely tracked following the US Federal Reserve’s latest policy decision. Rising bond yields and a stronger US dollar could dampen risk appetite and trigger capital outflows from emerging markets, including India. Conversely, any moderation in yields may provide support to equities and improve investor sentiment.
Geopolitical developments surrounding the ongoing US-Iran conflict are another key factor on investors’ radar. Iran has reportedly proposed a seven-day framework aimed at restoring normal shipping activity through the Strait of Hormuz in exchange for easing sanctions and broader ceasefire measures.
Any progress toward de-escalation could help stabilise energy markets, while renewed tensions may increase volatility across global financial markets.
Foreign institutional investor (FII) activity will remain crucial after sustained selling pressure in recent weeks. Analysts believe strong participation from domestic institutional investors (DIIs) and oversold market conditions could aid intermittent rebounds.
However, a lasting recovery will depend on stability in crude oil prices, easing global yields, improvement in geopolitical conditions and moderation in foreign fund outflows.
