Sensex, Nifty To Be Driven By Crude Oil, US-Iran Tensions

Indian stock markets are expected to be driven by global developments this week, with crude oil prices, the US-Iran conflict, and signals from the US Federal Reserve guiding investor sentiment.

The price of Brent crude oil, which is currently holding above $90 per barrel, remains a key concern for India. Geopolitical uncertainty around the Strait of Hormuz could also keep markets volatile.

According to Ajit Mishra, SVP, Research at Religare Broking Ltd, investors will closely follow the Jackson Hole symposium for indications about the future path of US interest rates. US GDP estimates, durable goods orders, and consumer confidence data will also be watched for clues about the health of the world's largest economy and the Federal Reserve's policy outlook.

In India, investors will track movements in the rupee, foreign institutional flows, and domestic liquidity conditions. The US-Iran conflict remains a key risk, with the expiry of the 60-day US-Iran agreement without a lasting settlement keeping uncertainty around the Strait of Hormuz and regional energy supplies elevated.

Ponmudi R, CEO of Enrich Money, said global investors will focus on three major factors — the Federal Reserve's policy trajectory, Nvidia's quarterly earnings, and the unresolved US-Iran conflict. Fed Chair Kevin Warsh's Jackson Hole address will be closely watched amid volatile US Treasury yields, persistent inflation concerns, and signs of weakness in the labour market.

Crude oil prices remain another major external risk. However, foreign portfolio investors have stepped up their buying of Indian equities, investing ₹23,544 crore so far in August.

Benchmark indices ended lower last week, with the BSE Sensex falling 468.42 points, or 0.60%, and the NSE Nifty declining 114 points, or 0.46%. Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, expects Indian markets to consolidate after two weeks of correction, with scope for a marginal near-term recovery.

Investors will particularly watch Brent crude prices and geopolitical developments for the market's next direction. The Indian economy is expected to grow 7% in Q1 FY27, with improving macro trends offsetting global risks and boosting the economic outlook.

The marginal recovery in the Nifty is expected to be driven by the increased buying by foreign portfolio investors. However, the overall sentiment remains cautious due to the ongoing global uncertainties.

In conclusion, the Indian stock markets are expected to remain sensitive to global developments, with crude oil prices, the US-Iran conflict, and signals from the US Federal Reserve guiding investor sentiment. The markets are expected to consolidate after two weeks of correction, with scope for a marginal near-term recovery.