Stock market outlook: West Asia tensions and crude oil prices to drive sentiment

Stock market sentiment this week is expected to be driven by geopolitical developments in West Asia, crude oil price movements, domestic macroeconomic data, foreign investor activity and the progress of the southwest monsoon, according to market analysts

New Delhi: Developments on the geopolitical front, including the latest military exchanges involving the US and Iran, their impact on crude oil prices, and domestic macroeconomic data announcements will dictate sentiment in the stock market this week, analysts said.

Besides, trading patterns of foreign investors and the progress of the southwest monsoon will also remain key areas of focus for investors, they added.

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“Market participants will closely monitor Industrial Production (IIP) data, the final HSBC Manufacturing, Services and Composite PMI readings, and the foreign exchange reserves data for fresh insights into the health of the domestic economy,” Ajit Mishra, SVP, Research, Religare Broking Ltd, said.

Globally, the trajectory of crude oil prices and geopolitical developments in West Asia will remain key drivers of market sentiment, he said.

The monthly auto sales numbers on July 1 will also be closely tracked by investors.

“The week ahead is likely to be shaped by developments on the geopolitical front, with investors closely monitoring tensions in the Middle East following the latest military exchanges involving US and Iranian forces. While broader diplomatic efforts remain in place, the recent flare-up has reminded markets that geopolitical risks remain elevated.

“Any signs of renewed negotiations or de-escalation could help sustain the recent improvement in risk sentiment, while a further deterioration in relations may prompt a reassessment of global growth and energy market expectations,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

On the domestic front, the progress of the southwest monsoon will remain a key area of focus for investors, he said.

Last week, the BSE benchmark Sensex climbed 297.57 points, or 0.38 per cent, while the NSE Nifty rose 42.9 points, or 0.17 per cent.

“Key data releases this week include India’s manufacturing PMI and industrial production data for May, along with the US manufacturing index,” Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.