MUMBAI: The Indian stock markets' sentiment will largely be shaped by persistent geopolitical tensions in the Middle East this week, and the bourses are expected to see volatile movements, analysts said on Sunday.
Kuwait announced stopping oil production and refining output as tankers cannot transit the Persian Gulf due to threats from Iran. The Arab monarchy described the output reduction as a precautionary step, though it did not reveal the extent of the cut.
Global investors are also grappling with the risk of commodity-driven inflation — creating a complex challenge for monetary policy makers, an analyst said.
Indian equity markets remained volatile and under sustained selling pressure in the previous week. The Nifty 50 closed at 24,450, while the Sensex settled at 78,919, both down 2.9 per cent on a weekly basis. Bank Nifty ended near 57,783 down 4.5 per cent, indicating clear underperformance relative to the broader market.
"Technically, the index remains below the previous swing low, indicating continued bearishness. In the short term, the index may continue to decline, with the potential to move towards 24,000 or lower," said Rupak De, Senior Technical Analyst at LKP Securities.
"On the higher side, resistance is placed at 25,000; until this level is crossed decisively, the trend is likely to favour a sell-on-rise strategy," the analyst said.
Selective buying opportunities may emerge in pharma, defence, public sector enterprises (PSEs), select metals and energy stocks, said Ajit Mishra–SVP, Research, Religare Broking Ltd.
Banking, realty, IT and select FMCG stocks may continue to face pressure, he added.
Investors will closely track global developments, crude oil prices and Consumer Price Index (CPI) inflation data scheduled for March 12, providing cues on price pressures following the recent spike in crude oil prices.
Additionally, foreign exchange reserves data will be tracked by investors to assess the strength of India’s external buffers.
Qatar’s energy minister Saad al-Kaabi had, in previous week, warned that war in the Middle East continuing for "few days" could cause Gulf exporters declaring force majeure, halting deliveries, pushing oil to $150 a barrel and natural gas to $40 per MMBtu within weeks.