Global Geopolitics and Energy Prices to Set Tone for Indian Markets
Indian equities are likely to remain sensitive to global and domestic developments this week. The West Asia conflict, crude oil prices, US economic data, foreign investor flows, and movements in the rupee will influence market sentiment.
The previous week ended on a weak note for Indian benchmarks, with the BSE Sensex falling 0.96% and the NSE Nifty declining 1.14%. The rise in international crude prices added to the pressure on equities, with Brent crude gaining over 8% and West Texas Intermediate (WTI) crude advancing more than 9%
Developments in the US-Iran conflict will remain a key risk factor for global markets. A stronger-than-expected labour market could reduce expectations of monetary easing, while signs of weakening employment may strengthen the case for rate cuts.
The jobs numbers and changes in US Treasury yields and the dollar could influence foreign flows into emerging markets like India. Foreign investor activity will also be closely monitored, with FPIs net sellers of Indian equities during the first week of September.
However, Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, pointed out that early signs suggest a continuation of net positive FPI flows into India in September. He noted that FPIs had recorded net inflows of Rs 2,374 crore into Indian equities during the first four days of September.