Mumbai: Indian equities could face another volatile week as investors track rising crude oil prices, global bond yields, strong US jobs data and foreign fund flows for market direction.
Geopolitical tensions between the US and Iran and uncertainty over the reopening of the Strait of Hormuz are also expected to influence sentiment.
Sensex Gains 363 Points
Benchmark indices ended higher on Friday but surrendered most intraday gains following the closing auction session.
The Sensex gained 363 points to close at 76,515, while the Nifty advanced 24 points to settle at 23,897.
Broader markets were mixed. The Nifty Midcap 100 slipped into negative territory, while the Nifty Smallcap 100 managed to close higher.
Crude Oil Jumps 8 Percent
Crude oil remains a major concern after prices climbed around 8 per cent during the week following renewed strikes between the US and Iran.
The continued closure of the Strait of Hormuz to oil transit has revived concerns about global supply disruptions.
Citi raised its average Brent crude forecast for the third quarter to USD 86 per barrel from USD 80, expecting the key shipping route to remain disrupted for longer.
Higher crude prices could increase inflationary pressure and corporate costs in India, which depends heavily on imported oil.
Bond Yields Add Pressure
A sharp global bond market selloff has pushed yields across several major economies to multi year highs.
Investors are weighing oil driven inflation, tighter monetary policy expectations and concerns over government finances. Higher borrowing costs could also weigh on economic growth.
US Jobs Data In Focus
US employers added 162,000 jobs in August, significantly exceeding market expectations. The labour force participation rate increased to 61.6 per cent, while unemployment remained at 4.1 per cent.
The stronger labour market has brought the possibility of a September US interest rate hike back into focus.
For Indian markets, investors will closely watch crude oil, global yields, US monetary policy expectations, geopolitical developments and foreign institutional flows for near term direction.
