Mumbai — Indian stock markets closed in the green on Friday, with the Sensex rising over 300 points and the Nifty closing above 23,100, buoyed by a slight cooling in oil prices. After a significant selloff on Thursday that wiped out over Rs 11.5 lakh crore in market capitalization of BSE-listed firms, investors appeared to take a breather.
Looking ahead, analysts predict ongoing volatility driven by geopolitical tensions, especially in the Middle East. The market’s near-term direction will largely hinge on developments in the region, with key variables including crude oil prices, foreign fund flows, currency movements, and global cues. Any easing in Middle East tensions or decline in crude prices could trigger relief rallies, while escalation could lead to further declines.
Here are five factors that could influence market movements in the coming week:
1) Escalating US-Israel-Iran Conflict
The conflict in the Middle East continues to intensify. Israeli military strikes targeted Iran and Beirut on Saturday, amid warnings from all sides that the situation could deteriorate further. Iran accused Israel of attacking its South Pars gas field and retaliated with missile attacks on oil and gas infrastructure across the Gulf, including in Qatar and Saudi Arabia. The ongoing hostilities have heightened fears of broader regional instability.
2) Crude Oil Prices Stay Elevated at $110+
Oil prices surged to nearly four-year highs, with Brent crude futures settling at $112.19 a barrel on Friday, amid disruptions caused by Iraq declaring force majeure and escalating Middle East tensions. The Strait of Hormuz, a crucial chokepoint for global oil supplies, has been effectively shut for over a week, blocking roughly 20% of the world’s oil exports and tightening supply, thus fueling fears of sustained high prices.
3) Continued Outflow of Foreign Funds
Foreign institutional investors (FIIs) remained net sellers, withdrawing over Rs 5,500 crore on Friday, according to provisional data from NSE. Over the past fortnight, FPIs have pulled out more than Rs 52,700 crore from Indian equities amid global uncertainties and rising macroeconomic headwinds. Meanwhile, domestic institutional investors showed some buying interest, but overall foreign outflows continue to weigh on sentiment.
4) Rupee Hits Record Low
The Indian rupee plunged to a historic low of 93.73 against the dollar on Friday, marking its steepest single-day decline since late 2022. Fears of rising oil prices and ongoing geopolitical tensions have exerted pressure, leading to a loss of over 2.5% since the Iran conflict escalated. The currency’s decline is compounded by overseas fund outflows and central bank dollar sales.
5) Weak Technical Outlook for Nifty
Technically, Nifty 50 is struggling to find stability, attempting to hold above the 23,000–23,200 support zone after recent sharp declines. However, the index remains below key resistance levels, with a potential break below 23,000 risking a slide toward 22,700–22,500. Momentum indicators, such as RSI and MACD, remain weak, suggesting limited upside unless a strong recovery momentum develops.
As geopolitical tensions remain high and crude oil prices stay elevated, market participants are advised to stay cautious amid ongoing global uncertainties.
