West Asia conflict, crude oil prices, US inflation data to drive markets next week

This week, the stock market is anticipated to be significantly influenced by the West Asia conflict, crude oil prices, and US inflation data, as indicated by analysts. Traders from abroad and global market trends are also likely to impact domestic equities. Analysts are closely watching the impact of stronger-than-expected US employment data on the Federal Reserve's September policy decision.

In addition, they are monitoring foreign institutional inflows, the rupee, crude oil prices, and domestic liquidity. The Strait of Hormuz developments, which have significant implications for India's inflation, external balance, and corporate profitability, are also being closely monitored. Brent crude gained over 8% during the week, while WTI crude rose over 9%, due to renewed US-Iran hostilities and concerns surrounding the Strait of Hormuz, which have increased the geopolitical risk premium in global energy markets.

With the US jobs data coming in stronger-than-expected, expectations for Federal Reserve policy and global market sentiment will be shaped by the upcoming US inflation data. The direction of Treasury yields and interest-rate expectations will be closely linked with the inflation narrative, while elevated oil prices due to the unresolved Middle East conflict are likely to continue affecting market sentiment.

During the previous week, the BSE Sensex fell by 749.08 points (0.96%), and the NSE Nifty declined by 277.95 points (1.14%). Indian equity markets have been volatile and pressured throughout the week, with the Nifty-50 extending its four-week losing streak, the longest such stretch in five months, as US-Iran hostilities intensified and drove crude oil prices up sharply, keeping risk sentiment on edge.