Geopolitics and Oil Prices Set to Dictate Global Market Sentiment This Week

Investors will be keeping a close eye on geopolitical developments and crude oil prices this week as they are likely to drive global market sentiment. The US-Iran diplomatic talks and crude oil prices remain critical factors, with any progress on a framework for reopening the Strait of Hormuz potentially easing energy prices and providing relief to India's import bill and the rupee.

Ajit Mishra, SVP Research at Religare Broking, pointed out that renewed geopolitical tensions could keep volatility elevated. On the domestic front, industrial production data for August and the HSBC manufacturing PMI reading will be released during the week, while market participants will closely monitor foreign institutional investor (FII) activity and upcoming monthly auto sales figures.

Global bond yields will also remain important following the Federal Reserve's September policy decision. Higher oil prices, elevated yields, and geopolitical uncertainty contributed to the sharp sell-off seen in the middle of last week, according to Ponmudi R, CEO of Enrich Money.