Volatile Week Ahead as Crude Oil and US-Iran Conflict Take Center Stage

The stock market is bracing for a volatile week ahead of key events that could shape investor sentiment. Crude oil prices and the US-Iran conflict are major drivers for market movement, according to analysts.

Ajit Mishra, SVP at Religare Broking Ltd, notes that investors will closely monitor the Jackson Hole symposium, particularly comments from the US Federal Reserve Chairman, for indications on the future trajectory of interest rates. The Fed's policy outlook is crucial as it weighs persistent inflation risks against signs of a softer labor market ahead of its September policy meeting.

Crude oil remains a major external risk, with Brent crude prices anchored above $90/barrel. Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, highlights the unresolved US-Iran conflict as another key factor influencing markets. The 60-day US-Iran agreement expired without a lasting settlement, leaving the Strait of Hormuz at the center of an unresolved confrontation.

Foreign portfolio investors have accelerated buying in Indian equities this month, infusing Rs 23,544 crore so far in August. However, the BSE benchmark Sensex declined 468.42 points, or 0.60 per cent, and the NSE Nifty dipped 114 points, or 0.46 per cent last week.

Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd, expects Indian equity markets to consolidate after two weeks of correction in the Nifty, with marginal recovery expected in the near term. Key monitorables include Brent crude prices and geopolitical developments.