Indian equities face heightened volatility amid rising crude oil prices, West Asia tensions, and inflation data releases, with geopolitical and macroeconomic factors shaping market sentiment this week.
Crude oil prices, tensions in West Asia and a run of inflation data are set to steer Indian equity markets this week, with investors also watching the Strait of Hormuz, foreign fund flows and a busy stretch of corporate earnings. Analysts said the mix of macro numbers and geopolitical risk could keep sentiment fragile even as domestic buying has helped offset some of the pressure.
Ajit Mishra, senior vice-president of research at Religare Broking, said traders will focus on July consumer price inflation, wholesale inflation and foreign exchange reserve figures for clues on price pressures and external stability. He added that the earnings season for the April-June quarter is gathering pace, with Hindustan Aeronautics, Bharat Forge, Grasim Industries and Tata Motors among the companies due to report.
Global markets are likely to take direction from developments around the Strait of Hormuz and wider negotiations involving Iran, according to Ponmudi R, chief executive of Enrich Money. The route is a critical choke point for oil shipments, and strategists have warned that any disruption could feed into higher fuel costs, firmer inflation expectations and more pressure on rate-sensitive stocks. Morgan Stanley has noted that the market impact of an oil shock depends heavily on how long the disruption lasts, while Chase has said the effect of crude on shares often differs depending on whether the move is driven by supply constraints or stronger demand.
Foreign portfolio investors continued to support Indian equities, with net purchases of ₹12,921 crore in the first week of August. That helped the market end last week in the black: the Sensex rose 404.53 points, or 0.51%, and the Nifty gained 187.05 points, or 0.76%. Santosh Meena, head of research at Swastika Investmart, said the new closing auction session framework for F&O stocks was a key feature of the previous week, alongside the Reserve Bank of India’s policy decision and persistent geopolitical unease. The calendar ahead remains dense, with India due to publish CPI inflation on August 12 and WPI inflation on August 14, while the US is scheduled to release CPI on August 12 and producer prices on August 13.
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