US-Iran Tensions, Oil Prices to Drive Indian Stock Market This Week

India's stock market is expected to remain sensitive to developments in the US-Iran conflict and its impact on crude oil prices. The ongoing tensions between the two nations have caused a surge in oil prices, which could further increase inflationary pressures in India, where the country relies heavily on imports to meet its crude requirements.

The domestic equity market has already been affected by rising crude prices, higher bond yields, and concerns over inflation, recording its longest run of weekly declines in six years. Additionally, foreign portfolio investor (FPI) activity is also likely to remain in focus, with FPIs turning net sellers again after recording positive inflows in July and August.

Investors will be tracking domestic economic data, including the upcoming industrial production data for August and the HSBC manufacturing PMI reading, which will provide fresh clues about the health of India's manufacturing and broader economic activity. Global cues from US economic data releases scheduled during the week will also remain important, as markets assess these numbers for signals on the strength of the US economy and the direction of global interest rates.