The Indian stock market is likely to remain volatile next week as investors track the US Federal Reserve's meeting minutes, developments in the US-Iran conflict, elevated crude oil prices, foreign fund flows and movements in gold prices.
After ending the week on a weak note, market participants are expected to closely monitor global cues and assess their implications for inflation, the rupee and corporate earnings. The Sensex declined 0.62 per cent over the week to close at 78,009.25, while the Nifty fell 0.83 per cent to 24,366. The broader market delivered a mixed performance, with the MidCap index gaining 0.50 per cent, while the SmallCap index declined 0.66 per cent.
A key trigger for domestic equities will be the release of the minutes of the US Federal Open Market Committee's July 28-29 meeting on August 19. The minutes are likely to provide greater clarity on the debate within the US central bank after policymakers voted 9-3 to keep the federal funds rate unchanged at 3.50 per cent-3.75 per cent.
Geopolitical developments surrounding the US-Iran conflict will remain another major focus for markets. Iran's Deputy Foreign Minister Kazem Gharibabadi has reiterated Tehran's position on the Strait of Hormuz, saying the strategic waterway has been, and will remain, under Iranian control.
Crude oil prices will therefore remain closely watched. Oil futures rose more than $1 a barrel on Friday amid attacks on tankers and a lack of significant progress towards a peace agreement between the Trump administration and Iran.
For India, sustained high crude prices could add pressure on inflation, the rupee and corporate margins, particularly for sectors with high energy and transportation costs. A further rise in oil prices could consequently weigh on investor sentiment and complicate expectations around domestic interest rates.
Foreign and domestic institutional flows will also remain important market drivers. Foreign institutional investors turned net buyers on August 14, purchasing shares worth Rs 12,854.44 crore and selling equities worth Rs 12,346.32 crore, resulting in net buying of Rs 508.12 crore. Domestic institutional investors also remained buyers, with purchases of Rs 14,295.49 crore against sales of Rs 13,939.09 crore, resulting in net buying of Rs 356.40 crore.
Meanwhile, analysts expect Indian equity markets to remain in a cautious consolidation phase, with the Nifty facing resistance around 24,600-24,650 and the Sensex finding immediate support near 77,700-77,500.
On the Sensex outlook, experts said the index mirrored the broader weakness and slipped back towards the psychologically important 78,000 level. Immediate support is seen at 77,700-77,500, with a deeper pullback risking a test of 77,000. On the upside, 78,500-78,800 stands as the immediate resistance, a level the index will need to reclaim to restore the improving technical structure seen earlier in the month.
On the Nifty, experts said the weekly candle indicates a corrective move following the recent recovery, with the index facing resistance near the 24,600-24,650 zone. A decisive break below 24,350 could trigger further profit booking, with immediate support at 24,200, followed by the 23,800-24,000 zone. On the upside, a decisive close above 24,600 could trigger a fresh upmove towards the 24,800-25,000 zone.
The domestic benchmark indices ended lower during the week, snapping a two-week winning streak as concerns over the US-Iran standoff and developments around the Strait of Hormuz triggered profit-booking at elevated levels.
Although first-quarter earnings remained largely resilient and select sectors continued to attract buying interest, broader market momentum remained subdued amid heightened uncertainty. The Nifty remained largely range-bound through most of the week, reflecting a cautious and selective approach among investors.
Supportive domestic fundamentals were overshadowed by geopolitical concerns and rising crude oil prices, limiting the scope for sustained gains. Investors will therefore closely watch global developments, oil prices, institutional flows and key technical levels in the week ahead.
