Dalal Street Week Ahead: West Asia crisis, crude prices among 10 key factors to watch

Stock market news: Sensex, Nifty news.

• Markets shut on Thursday for Ram Navami; choppy week ahead.
• FPIs stay net sellers on West Asia conflict, weak rupee.
• Crude, rupee, IPOs and PMI data to steer market mood.

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The domestic stock markets will have a holiday-shortened week ahead, with trading remaining closed on Thursday, March 26, on account of Shri Ram Navami.

Benchmark indices Sensex and Nifty had fallen 3.3 percent each on Thursday, marking their worst single-day decline since June 4, 2024. However, both indices ended the week with marginal losses of 0.04 percent and 0.16 percent, respectively, aided by value buying earlier in the week and a partial recovery on Friday.

Out of 16 major sectoral indices, 10 ended the week in the red. The small-cap index declined 1.1 percent, while the mid-cap index rose 0.2 percent.

Key factors to watch next week

1) FPI activity: Selling by foreign portfolio investors (FPIs) intensified amid the ongoing conflict in West Asia. FPIs remained net sellers on all trading days in March. Total outflows through exchanges stood at Rs 90,152 crore till March 20.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said weakness in global equities following the West Asia conflict, rupee depreciation and concerns over elevated crude prices impacting growth and earnings have weighed on FPI sentiment. He added that relatively lower returns from Indian markets compared to other global markets over the past 18 months have also contributed to FPI outflows.

2) West Asia conflict: The conflict in West Asia has entered its fourth week and continues to impact global markets. Investor sentiment is likely to remain sensitive to developments in the region. Iran has warned of retaliatory action on regional infrastructure if the United States proceeds with its stance on the Strait of Hormuz. US President Donald Trump has said action would be taken if the Strait is not fully reopened.

3) Crude oil prices: Crude oil prices remain elevated amid geopolitical tensions. Prices had moved close to USD 119 per barrel following concerns over energy infrastructure in the region, before moderating slightly.

The US administration has announced a temporary relaxation of sanctions on Iranian oil already loaded onto vessels before March 20, with the exemption valid till April 19.

4) Rupee movement: The movement of the Indian rupee against the US dollar will remain in focus. The rupee declined 64 paise on Friday to close at a record low of 93.53 against the dollar.

Forex dealers said persistent foreign fund outflows and rising crude prices have kept the currency under pressure. The widening trade deficit and inflation concerns amid higher energy costs are also weighing on sentiment.

5) Domestic economic data: Market participants will track HSBC Flash PMI data for manufacturing, services and composite sectors for cues on business activity. Industrial production data will also be monitored for indications of economic momentum, according to market participants.

6) IPO activity: Primary market activity is set to remain active, with multiple public issues scheduled during the week.

Mainboard IPOs of Sai Parenteral, Amir Chand Jagdish Kumar (Exports) and Powerica are set to open, along with SME issues of Tipco Engineering India, Highness Microelectronics, Vivid Electromech and Emiac Technologies.

Listings expected during the week include Innovision, GSP Crop Science, Raajmarg Infra Investment Trust and Novus Loyalty. The IPO of Central Mine Planning & Design Institute Ltd will close on March 24.

7) Technical View: The analysts at the Choice Broking said, "From a technical levels perspective, 23,850 remains the immediate resistance, followed by 24,000 and 24,150. On the downside, 22,950 and 22,700 serve as crucial support levels, with a break below 22,700 potentially triggering accelerated downside movement. Traders are advised to stay cautious and adhere to strict risk management practices amid the prevailing volatility."

8) Bank Nifty Technical View: From a momentum standpoint, the weekly RSI at 33.82 indicates weak momentum and a move toward the oversold region. A sustained close above 54,000 could signal strengthening bullish momentum and potentially trigger a recovery. However, failure to reclaim this level may keep the index under short-term corrective pressure. Traders should remain cautious and disciplined while monitoring key levels for the next directional move, said analysts at the Choice Broking.

9) Corporate Action: 

10) Market volatility: Elevated volatility, as indicated by India VIX, is expected to keep market participants cautious in the near term.

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