Stock markets to focus on global trends, foreign investors' trading activity this week

The domestic markets are expected to be influenced by various global trends and the trading activity of foreign investors in the upcoming week, with a focus on the movement of the oil benchmark Brent crude. Analysts highlighted several factors that could impact the equity markets, which experienced a nearly 3 per cent decline in the previous week.

Santosh Meena, Head of Research at Swastika Investment Ltd, noted that this week includes the September month Futures and Options (F&O) expiry, an event that typically introduces volatility into the market.

"This week marks the September month Futures and Options (F&O) expiry, which is expected to bring about volatility in the market," said Meena.

Market concerns 

Concerns such as the rising prices of crude oil, a strong US dollar index, increasing Treasury yields, and continuous selling by foreign institutional investors (FIIs) have been weighing on market sentiment, according to Amol Athawale, Vice President of Technical Research at Kotak Securities Ltd.

Analysts will closely monitor global and domestic macroeconomic data, trends in global stock markets, movements in crude oil prices, fluctuations in the exchange rate between the rupee and the dollar, and the investment activities of FIIs and DIIs (domestic institutional investors).

Additionally, key events like the release of US GDP data, UK GDP figures, and Eurozone inflation data will be important drivers for the market in the coming week, as pointed out by Arvinder Singh Nanda, Senior Vice President at Master Capital Services Ltd.

During the previous week, both the BSE benchmark and Nifty index recorded declines, with the BSE benchmark falling by 1,829.48 points (2.69 per cent) and the Nifty declining by 518.1 points (2.56 per cent). The equity markets remained under pressure for the fourth consecutive session on Friday.

The market downturn in the past week was attributed to factors such as significant profit-taking, particularly driven by a sharp decline in HDFC Bank's stock, weak global cues, and substantial selling by foreign institutional investors. Furthermore, global markets have been facing challenges, particularly in response to the ultra-hawkish policy stance adopted by the US Federal Open Market Committee (FOMC), according to Santosh Meena.

"Last week has seen significant profit-booking in the market, primarily driven by a steep decline in HDFC Bank, weak global cues, and substantial selling by foreign institutional investors (FIIs). The global markets are facing challenges, particularly after the ultra-hawkish Federal Open Market Committee (FOMC) policy," Meena said.

Despite having reached record-high levels, the equity benchmark indices experienced declines last week, largely influenced by the bearish sentiment prevailing in global markets. While the FOMC decided to maintain key interest rates in its recent meeting, the markets reacted negatively to the US Fed's hawkish stance on interest rates, and crude oil prices remained elevated, as mentioned by Shrikant Chouhan, Head of Research (Retail) at Kotak Securities Ltd.

(With PTI Inputs)