Indian stock markets are poised for a volatile week, with investor attention firmly fixed on geopolitical developments surrounding the US-Iran situation, crude oil prices, and crucial inflation data, alongside the impact of foreign investor activity.
Illustration: Dominic Xavier/Rediff
Key Points
- Indian stock markets are anticipated to be highly volatile and driven by geopolitical headlines, specifically the ongoing US-Iran situation.
- Brent crude oil prices, particularly a sustained decline below USD 90 or de-escalation, will be a critical macro variable for market direction.
- The rupee-dollar trend, foreign institutional investor (FII) flows, and upcoming inflation data (India’s April CPI and US April CPI/PPI) will also significantly influence market movements.
- Several major companies, including Canara Bank, Tata Power, and Bharti Airtel, are scheduled to announce their quarterly earnings this week, which will drive stock-specific action.
- Foreign investors have continued to withdraw from Indian equities, pulling out Rs 14,231 crore so far this month amid global macroeconomic uncertainties.
Stock markets are expected to remain sensitive to geopolitical developments this week, with investor attention firmly focused on events surrounding the ongoing US-Iran situation and crude oil prices, analysts said.
Besides, the rupee-dollar trend and trading activity of foreign investors would influence trading in the markets, they noted.
Geopolitical Impact on Market Volatility
“Markets this week are expected to remain highly volatile and largely driven by geopolitical headlines, with investor attention firmly focused on developments surrounding the ongoing US-Iran situation,” Ponmudi R, CEO – Enrich Money, an online trading and wealth tech firm, said.
Brent crude oil will remain a critical macro variable for market direction, he said.
“A sustained decline in crude prices below the USD 90 mark, or meaningful progress towards de-escalation, could support relief rallies across risk assets.
“Conversely, prolonged geopolitical uncertainty or renewed tensions may continue to weigh on sentiment and keep volatility elevated,” Ponmudi added.
Inflation Data and Corporate Earnings
Inflation data announcements during the week would also guide markets’ movement, an expert said.
Meanwhile, Canara Bank, Tata Power Company, Bharti Airtel, DLF, Hindustan Petroleum Corporation Ltd and JSW Steel would announce their quarterly earnings this week.
Siddhartha Khemka – Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, “Indian equities are expected to remain highly sensitive to geopolitical developments in the near term, with markets likely to trade within a broader range.
“Key macro events include India’s April CPI inflation data, which will be closely tracked for implications on the RBI’s rate outlook, alongside US April CPI and PPI prints that could materially shape Fed rate-cut expectations, bond yields and global risk sentiment.”
Market Performance and FII Flows
Last week, the BSE benchmark Sensex climbed 414.69 points or 0.53 per cent, and the NSE Nifty went up by 178.6 points or 0.74 per cent.
“Indian equity markets witnessed a volatile and range-bound week, with sentiment remaining cautious despite intermittent recovery attempts.
“Early optimism driven by hopes of de-escalation in the Middle East and easing oil prices faded quickly as renewed tensions between the US and Iran resurfaced,” Ponmudi of Enrich Money, said.
Foreign investors continued to pare their exposure to Indian equities, withdrawing Rs 14,231 crore so far this month amid global macroeconomic uncertainties.
“Looking ahead, the market’s focus will continue to remain on geopolitical tensions, crude oil prices, and rupee movement. Alongside these factors, FII flows are likely to play a crucial role in determining the direction of large-cap stocks.
“We are also entering the final phase of the Q4 earnings season, which is expected to drive stock and sector-specific action,” Santosh Meena, Head of Research at Swastika Investmart Ltd, said.
