Dalal Street heads into the new trading week with a strong focus on global uncertainty, as investors closely monitor developments in the situation in the Middle East, fluctuations in crude oil prices and the behavior of foreign investors.
Analysts said sentiment is likely to remain fragile and heavily influenced by developments in negotiations between the US and Iran, while movements in the rupee, global stocks and the US dollar are also expected to shape the market direction in the coming days.Trading activity during the week is also expected to be shaped by the rupee’s movement against the US dollar, as investors continue to assess the impact of global uncertainty on risk appetite.
Markets will remain closed on Thursday on the occasion of Bakri Eid.The main thrust of sentiment emerged over the weekend after US Secretary of State Marco Rubio said negotiations between Washington and Tehran had shown some progress, raising expectations that the ongoing conflict in West Asia could be close to resolution.Ajit Mishra, senior vice president of research at Religare Broking Ltd, said investors will closely follow developments related to crude oil, global currencies and bond markets.
He added: “This week is expected to remain highly sensitive to global macroeconomic developments and currency movements. Investors will also monitor crude oil prices, developments in the US-Iran negotiations, and the path of the US dollar and bond yields, all of which are expected to impact foreign flows and overall risk appetite.”Apart from geopolitical developments, the Reserve Bank’s decision to transfer a record dividend of Rs 2.87 lakh crore to the government for the year ending March 2026 is also expected to remain in focus.
The announcement comes at a time when rising import costs and supply chain pressures linked to the conflict in West Asia continue to impact the economy.According to Mishra, market participants are expected to evaluate how the RBI compensation payment will impact liquidity conditions, fiscal flexibility and government spending in the coming months.Market behavior in the coming sessions is expected to remain sensitive to new headlines surrounding diplomatic negotiations and oil prices, said Ponmudi R, CEO, Enrich Money.
“Markets are expected to remain volatile and highly headline-driven next week, with investor attention focused heavily on developments surrounding the US-Iran situation, broader diplomatic negotiations and crude oil price movements,” he said.“While hopes for a diplomatic breakthrough and easing of geopolitical tensions have modestly improved sentiment, investors continue to remain cautious as uncertainty surrounding the final outcome of the negotiations remains high,” Ponmudi added.He also said that investors are expected to monitor institutional flows, global equity trends, macroeconomic indicators and the rupee for further market signals. “As global uncertainty continues to rise, market participants are likely to remain selective and cautious despite the recent improvement in sentiment,” he said.Markets will need stronger supporting factors to build a more positive environment, said Vinod Nair, Head of Research at Geojit Investments Limited. According to him, significant decline in crude oil prices, steady inflows of foreign institutional investors and stable 1QFY27 earnings outlook without major cuts will be important for sustaining the momentum.In the previous week, the benchmark BSE index rose 177.36 points, or 0.23%, while the NSE Nifty advanced 75.8 points, or 0.32%.