Market outlook: Iran-Israel conflict, crude oil prices, FII activity to drive stock market this week
New Delhi: The coming week will be crucial for Indian equities, with market sentiment likely to be shaped by geopolitical developments, crude oil trends, and foreign institutional investor (FII) activity.
The spotlight is now on the escalating Iran-Israel conflict, especially after the US launched airstrikes on Iran’s nuclear facilities, marking its direct involvement in the war.
Market analysts warn that any further escalation in the conflict could weigh heavily on investor sentiment.
According to Sudeep Shah, Head of Technical Research and Derivatives at SBICAP Securities, the Iran-Israel war is playing a significant role in driving market emotions.
“Currently, the market is witnessing selective strength as investors reassess the risks of a broader regional conflict,” he noted.
Crude oil prices have remained elevated after breaching their 200-day EMA last week, although momentum has slowed slightly.
Shah pointed out that persistently high oil prices are stoking fears of inflation and potential supply chain disruptions, both of which are key concerns for the market going forward.
Despite geopolitical tensions, Indian markets ended the past week on a strong note. The Nifty surged 1.59 per cent or 393.80 points to close at 25,112.40, while the Sensex rose by 1.59 per cent or 1,289.57 points to settle at 82,408.17.
This rally was led by the Nifty Private Bank Index, which gained 1.64 per cent.
Other sectoral indices also performed well, with Nifty Auto up 1.51 per cent, Nifty IT rising 1.36 per cent, and Nifty Services gaining 1.48 per cent.
However, the Nifty Metal and Pharma indices declined more than 1.5 per cent during the same period.
Commenting on the Nifty’s outlook, Shah said, “Over the last 28 trading sessions, the Nifty has largely oscillated between 25,222 and 24,462. Notably, 16 of those sessions saw gap-up or gap-down openings, indicating continued market volatility. This pattern suggests limited opportunities for directional trades in the current environment.”