Domestic stocks are expected to remain volatile this week, as investors track the Reserve Bank’s monetary policy decision, global macroeconomic signals and evolving developments in the conflict in West Asia, analysts said, PTI reported.Market participants will also closely monitor crude oil price movements and foreign fund inflows, which continue to weigh on sentiment.Vinod Nair, head of research at Geojit Investments Ltd, said the Reserve Bank of India’s Monetary Policy Committee meeting will act as a key domestic catalyst, as investors focus on the central bank’s stance on inflation and growth.“A pause in interest rates is an almost certain consensus, with the central bank walking a tightrope between inflation risks from crude oil and the lowest manufacturing PMI in four years suggesting a fading growth momentum.
The Governor’s commentary on the path of the interest rate cycle and FY27 outlook will be closely watched.“Globally, the US CPI reading for March will carry great significance, as it buries remaining hopes for a Fed rate cut, strengthens the dollar and tightens financial conditions for emerging markets, including India,” Nair said.He added that geopolitical developments in West Asia will remain the dominant factor in shaping the market direction.
“Indian markets are returning after a three-day gap and remain highly vulnerable to the war developments at the end of the week, with the raw track and any credible signal of a ceasefire being the critical variable that could lead to either a sharp rise in relief or an extension of the current sell-on-rise mode,” he said.In the previous holiday-shortened week, the BSE Sensex fell 263.67 points, or 0.35%, while the NSE Nifty fell 106.5 points, or 0.46%.Investor sentiment will remain closely linked to developments in the conflict in West Asia, said Siddhartha Khemka, Head of Research (Wealth Management) at Motilal Oswal Financial Services Ltd.Brent crude prices remained high near $107 a barrel, raising concerns about imported inflation. He noted that currency pressures also intensified, with the rupee weakening sharply before recovering towards Rs 93 against the US dollar after the Reserve Bank of India intervened.Foreign institutional investor (FII) outflows continue to be a major drag, with March witnessing heavy selling worth Rs 1.2 lakh crore, among the highest monthly outflows in recent years.“Investors will be watching the Federal Open Market Committee (FOMC) minutes, GDP data and initial jobless claims for further signals on growth and the path of policy.“Overall, markets are expected to remain volatile as geopolitical developments, crude oil price movements, investment division flows and global macro data continue to drive sentiment,” Khemka said.Analysts said any signs of de-escalation in the conflict in West Asia could ease crude oil prices and stabilize the currency, providing relief to markets, while further escalation could prolong risk aversion and continue to pressure foreign flows.
