Market Volatility Expected to Continue Amid Rising Oil Prices and Geopolitical Tensions
The Indian stock market is expected to remain under pressure in the coming week due to various factors. Oil prices have surpassed $100 a barrel amid fears of a prolonged Iran war, and geopolitical tensions in West Asia are also contributing to the volatility. The US Federal Reserve's policy meeting on September 16 will be closely watched by investors, as several economists see the possibility of a 25-bps rate hike. The probability of a rate hike has increased to nearly 90 percent, particularly after the latest inflation data showed headline CPI at 3.4 percent YoY in August.
The Bank of Japan is also expected to raise its benchmark interest rate by 25 bps to 1 percent on Friday, according to most economists. This move could have implications beyond Japan, as further yen strength could compound dollar weakness alongside whatever the Fed decides. Brent crude oil futures climbed to as high as $108 a barrel before closing 8.65 percent higher on the week at $104.61 a barrel.
India's inflation data for August is also expected to be closely watched by market participants, with most economists expecting both readings to rise from July's levels of 4.45 percent and 9.78 percent, respectively. The trend in foreign institutional investor (FII) flows will also be closely watched, as they have been net sellers in recent weeks.