US Fed decision, West Asia conflict to steer markets this week

Stock markets are expected to remain driven by developments in the West Asia conflict, crude oil prices, the US Federal Reserve's policy decision and domestic earnings this week. Investors will also monitor June IIP data and key corporate quarterly results for market direction

New Delhi: Developments around the West Asia conflict, crude oil prices and the US Fed interest rate decision will be the key drivers of market movement this week, analysts said.

Besides, quarterly earnings will drive sentiment in the market, they added.

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“Developments surrounding the US-Iran conflict, shipping activity through the Strait of Hormuz, and movements in crude oil prices will remain key drivers of global risk sentiment. In addition, investors will closely monitor the US Federal Reserve’s policy meeting, where interest rate guidance and commentary on inflation will be critical for global markets,” Ajit Mishra, SVP, Research, Religare Broking Ltd, said.

On the domestic front, market participants will track June Industrial Production (IIP) data, he added.

Major companies reporting earnings this week include Coal India, BEL, Larsen & Toubro, Hindustan Unilever, Adani Enterprises, Asian Paints, Adani Ports, Bajaj Finance, Mahindra & Mahindra, Tata Steel, Maruti Suzuki, ITC and Sun Pharma, Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd, said.

“Investor attention in the week ahead is expected to remain firmly anchored on developments in the Middle East, with the escalating conflict between the US and Iran continuing to dominate global market sentiment. The sharp rise in crude oil prices has revived concerns over inflation, economic growth and the outlook for monetary policy, keeping investors in a defensive, risk-averse stance,” Ponmudi R, CEO, Enrich Money, an online trading and wealth tech firm, said.

The US Federal Reserve’s policy meeting will be the defining macro event of the week. While markets overwhelmingly expect policymakers to leave interest rates unchanged, the recent surge in energy prices has prompted some investors to question whether inflation risks could remain elevated for longer, he said.

“More important than the rate decision itself will be the Federal Reserve’s assessment of the inflation outlook, economic growth and the likely trajectory of monetary policy over the coming quarters,” Ponmudi added.

Last week, the BSE benchmark Sensex tanked 2,091.68 points, or 2.67 per cent, and the NSE Nifty declined 566.85 points, or 2.32 per cent.