West Asia situation, crude oil prices likely to steer markets this week

Equity Market Trends: Key Factors to Watch This Week

Developments surrounding the ongoing conflict in West Asia and crude oil price movement will be the major factors driving trends in the equity market this week, analysts said.

Major Influencers

• US Fed interest rate decision: Analysts expect this decision to impact trading in markets.
• Global crude oil prices: The ongoing conflict in West Asia is likely to influence overall market direction.
• Domestic macroeconomic indicators:
  • WPI inflation
  • Balance of trade data
  • Foreign exchange reserves
• Globally significant data releases:
  • US Federal Reserve's interest rate decision
  • FOMC (Federal Open Market Committee) economic projections
  • US jobs data

Market Performance

Last week, the BSE benchmark Sensex tanked 4,354.98 points or 5.51 per cent, and the NSE Nifty dropped 1,299.35 points, or 5.31 per cent.

Since February 27, the 30-share BSE benchmark has nosedived 6,723.27 points or 8.27 per cent.

Geopolitical Tensions

The US-Israel and Iran conflict escalated from February 28 onwards, leading to a blockade of the Strait of Hormuz, the main transit route for Gulf energy supplies.

Prolonged disruption to shipping could tighten global oil supplies, influence inflation expectations across Asia, and keep overall risk sentiment fragile.

FII Flows and Rupee Movement

Foreign investors withdrew Rs 52,704 crore (approximately USD 5.73 billion) from domestic equities in the first fortnight of March amid escalating tensions in West Asia, the depreciation of the rupee, and concerns over the impact of high crude oil prices on India's growth and corporate earnings.

FII flows and movements in the rupee will remain key indicators, as global capital allocation toward emerging markets, like India, continues to be influenced by geopolitical developments and commodity price volatility.

Key Economic Releases

Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, "Key economic releases this week include Eurozone CPI, the Fed interest rate decision, BoE (Bank of England) and ECB (European Central Bank) policy decisions, and the US jobs data".