West Asia Tensions Fuel Market Volatility as Oil Prices Surge
Market analysts are predicting that developments in the West Asia conflict, crude oil prices, and US inflation data will be major drivers for the stock market next week. The recent surge in crude oil prices has been significant, with Brent crude gaining over 8% during the week, while WTI crude rose by more than 9%. This increase in geopolitical risk premium is attributed to renewed US-Iran hostilities and concerns surrounding the Strait of Hormuz.
Ajit Mishra, SVP, Research, Religare Broking Ltd, noted that investors will closely monitor the impact of the stronger-than-expected US employment data on expectations regarding the Federal Reserve's September policy decision. The direction of Treasury yields and interest-rate expectations will remain closely intertwined with the inflation narrative.
Foreign Institutional Flows (FII) also played a significant role in the market, with investors pulling out Rs 7,443 crore in the first week of September. This comes after FPIs infused over Rs 29,600 crore in August and Rs 20,200 crore in July.