US-Iran tensions, crude oil, tariffs, FII flows likely to drive stock market next week

Mumbai, Sep 20

The Indian stock market is likely to remain sensitive to developments around the US-Iran conflict, crude oil prices, US tariff moves and global bond yields in the coming week, with foreign fund flows and the rupee-dollar movement also expected to influence investor sentiment.

Market participants will closely track any signs of progress in US-Iran negotiations, changes in energy prices and their potential impact on inflation and economic growth. Any development on the diplomatic front could have implications for crude oil prices, global risk sentiment and equity markets.

US tariff developments will also remain in focus. The US House of Representatives has approved a Russia sanctions bill that would empower President Donald Trump to impose tariffs of up to 100 per cent on countries purchasing Russian oil and gas. The move could have implications for major importers such as India and China and may affect global trade and energy flows.

Crude oil prices are likely to remain another major market driver. Foreign institutional flows will also be closely watched. FIIs and FPIs turned net buyers in the cash market on September 18, purchasing shares worth Rs 599.54 crore more than they sold. Domestic institutional investors also remained net buyers, with net purchases of Rs 1,019.69 crore.

The rupee-dollar movement could add another layer of volatility for equities. Meanwhile, the Indian stock market ended the truncated trading week on a weak note, weighed down by elevated crude oil prices and rising global bond yields. Concerns over the near-term inflationary impact of higher energy costs, along with their potential drag on economic growth, continued to weigh on investor sentiment.

For the week, the Sensex declined 0.65 per cent to close at 74,294.46, while the Nifty slipped 0.22 per cent to end at 23,346.40. Broader market indices, including the midcap and smallcap segments, remained largely flat after a volatile week, following several weeks of outperformance.