Mumbai: After last week’s sharp decline driven by worsening geopolitical tensions and a significant outflow of foreign funds, the Indian equity markets are bracing for another challenging week. Investor sentiment remains fragile as the Reserve Bank of India’s (RBI) interest rate decision, along with rising tensions in the Middle East, could impact market performance further.
The BSE Sensex dropped by a staggering 3,883.4 points, or 4.53%, while the Nifty slumped 1,164.35 points, or 4.44%. This sharp decline can be attributed to both domestic and international factors. The geopolitical situation in the Middle East, in particular, has rattled global investors, with its ripple effects likely to continue into this week. The upcoming RBI’s interest rate decision will also be closely watched, as it could significantly sway domestic markets.
Focus on RBI’s Interest Rate Decision
Pradesh Gour, Senior Technical Analyst at Swastika Investment Ltd, noted that “on the domestic front, the market’s focus will be on the RBI Monetary Policy Committee (MPC), which is scheduled to meet from October 7 to 9, 2024, with the outcome to be announced on Wednesday.” The decision on interest rates could influence the direction of both Nifty and Sensex, alongside quarterly earnings from major companies like TCS.
He added, “Commodity prices, the US dollar index, and the macroeconomics situation in the US will determine the direction of the market.”
Global Factors at Play: Middle East Tensions and Commodity Prices
Beyond domestic factors, global events are expected to play a critical role. The ongoing geopolitical tensions in the Middle East are contributing to volatile commodity prices, particularly crude oil. As Vinod Nair, Head of Research at Geojit Financial Services, mentioned Nifty50 and Sensex could not maintain the highs of 26,000 and 85,000 respectively due to the growing crisis in the Middle East.
In the past five days of market correction, Indian investors have lost a staggering Rs. 16.26 lakhs in total earnings, driven by concerns over crude oil prices and geopolitical uncertainty.
Outlook for the Week Ahead
Ajit Mishra, SVP, Research at Religare Broking Ltd, highlighted the importance of foreign flows, adding, “The trend in foreign flows, along with domestic flows, will be crucial. On the domestic front, the focus will be on the outcome of the upcoming MPC meeting on October9.”
The combination of RBI’s rate decision, geopolitical risks, and global commodity prices means that Indian markets may remain under pressure, with investors staying cautious and closely monitoring the developments.
Geopolitical tensions and RBI’s upcoming interest rate decision could lead to a further decline in Indian markets, with key sectors like IT and commodity prices facing the brunt. Stay updated with the latest market trends. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
