Indian stock markets are likely to remain sensitive this week to developments in the West Asia and movements in crude oil prices, with investors also keeping an eye on bond yields, foreign fund flows and key domestic economic data.
The market enters the week after the Nifty 50 and Sensex ended lower for the seventh consecutive week. The Nifty fell 0.9% during the week ended September 25 to close at 23,140.50, while the Sensex declined 0.5% to 73,895.74. Elevated oil prices, higher US Treasury yields and foreign investor selling remained among the key factors weighing on sentiment.
Fresh pressure on the financial basket following the IRDAI proposal to cap insurance commissions further dented investor sentiment.
US-Iran War In Focus:
Developments surrounding the US-Iran conflict and the Strait of Hormuz are expected to remain a major market trigger.
Any progress on a framework for reopening the Strait of Hormuz could ease energy prices and provide some relief to India’s import bill and the rupee, while renewed geopolitical tensions could keep volatility elevated, said Ajit Mishra, SVP – Research, Religare Broking.
Crude Oil Prices:
Crude oil is likely to remain one of the biggest variables for Dalal Street. Brent crude moved above $107 a barrel last week amid continuing geopolitical concerns, after briefly falling below the $100 mark earlier.
The surge in Brent following renewed tensions in the Middle East raised concerns over India’s import bill, inflation and the rupee, while rising global bond yields added to pressure on emerging-market equities.
Rupee and foreign investor:
The rupee will be another important indicator, particularly amid elevated crude prices and foreign portfolio investor (FPI) outflows. The currency closed at Rs 95.75 against the US dollar on September 25.
Foreign investor activity will also be closely watched after overseas investors continued to remain sellers in Indian equities.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said, “The trend of FPI flows turning negative after positive inflows in July and August was evident early this month. This trend has sustained and the total equity outflows through exchanges have touched Rs 25682 crores this month through 25th August. Also the trend of FPI investment through the primary market continues with total investment of Rs 8551 crores up to 25th of this month.”
“This trend of selling through the exchanges and investing through the primary market has taken the total FPI selling this year through exchanges to Rs 295971 crores and the total investment through the primary market during this period to Rs 54398 crores.”
Busy IPO Market:
The primary market will also remain active during the week, with 20 IPOs scheduled to open for subscription and collectively seeking to raise around Rs 1,292 crore.
