New Delhi | Developments related to the ongoing conflict in West Asia and its impact on crude oil prices will continue to rule investors' sentiment in a holiday-shortened week ahead, analysts said.
Besides, trends in global markets, trading activity of foreign investors and rupee-dollar movement would also drive momentum in equities.
Stock markets would remain closed on Thursday for Shri Ram Navami.
"This week is expected to remain data-sensitive amid ongoing global uncertainties. Developments in the West Asia conflict and movements in crude oil prices will continue to act as key external drivers and are likely to dictate the near-term market trend.
"On the domestic front, investors will closely monitor HSBC Flash PMI data for manufacturing, services, and composite segments, which will provide an early indication of business activity trends," Ajit Mishra -- SVP, Research, Religare Broking Ltd, said.
Foreign investors have pulled out Rs 88,180 crore (about USD 9.6 billion) from Indian equities so far this month, weighed down by escalating tensions in West Asia, a weakening rupee and concerns over the impact of elevated crude oil prices on India's growth and corporate earnings.
"Looking ahead, markets are likely to remain highly volatile and event-driven, with near-term direction largely contingent on developments in the Middle East, particularly the evolving situation around the Strait of Hormuz. Any prolonged disruption could keep crude prices elevated above the USD 100-mark, intensifying inflationary and current account pressures while sustaining a risk-off sentiment," Ponmudi R, CEO, Enrich Money, an online trading and wealth tech firm, said.
FII flows, rupee movement, and global cues, including US dollar strength and broader market sentiment, will be key variables to monitor. Any signs of de-escalation or easing in crude prices could trigger short-covering or relief rallies, while renewed escalation may lead to further downside pressure, he added.
Last week, the BSE benchmark Sensex dipped 30.96 points, or 0.04 per cent, and the NSE Nifty slipped 36.6 points, or 0.15 per cent.
