MUMBAI: Dalal Street investors are bracing for heightened volatility and a negative opening on Monday as the Iran-Israel conflict will compound turmoil in global markets.
Traders would remain cautious and wait for cues to take a view about the market’s trend, they said. For one, any escalation of the conflict could have a direct impact on crude oil prices globally. Over the past two weeks, crude prices have been on an upward path after Ukraine and Russia both targeted each other’s energy installations. With crude among India’s top import items, this could mean pressure on the currency and domestic inflation, economists and analysts said.
In the last one month, Brent crude prices have jumped about 6% to above the $90/barrel level, and analysts expect it could soon break above the $100-mark if geopolitical tensions in West Asia escalate.
This could have a negative impact on the stock market, especially on the stocks of oil marketing companies, gas utilities and of the firms which use petroleum products for their manufacturing.
The weakness of the rupee, in a situation where US bond yields are rising, could prompt foreign portfolio investors to take money out of India, a debt fund manager said. The rupee is currently trading near its all-time low of 83.45-to-the-dollar mark. Any large withdrawal by FPIs could weaken the Indian currency further against other major currencies, the fund manager said.
The recent weakness in the US market, mainly due to rising inflation that weakened the chances of a rate cut by the US Fed and a below-part start to the earnings season, could also impact the sentiment on Dalal Street on Monday.
Traders would remain cautious and wait for cues to take a view about the market’s trend, they said. For one, any escalation of the conflict could have a direct impact on crude oil prices globally. Over the past two weeks, crude prices have been on an upward path after Ukraine and Russia both targeted each other’s energy installations. With crude among India’s top import items, this could mean pressure on the currency and domestic inflation, economists and analysts said.
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In the last one month, Brent crude prices have jumped about 6% to above the $90/barrel level, and analysts expect it could soon break above the $100-mark if geopolitical tensions in West Asia escalate.
This could have a negative impact on the stock market, especially on the stocks of oil marketing companies, gas utilities and of the firms which use petroleum products for their manufacturing.
The weakness of the rupee, in a situation where US bond yields are rising, could prompt foreign portfolio investors to take money out of India, a debt fund manager said. The rupee is currently trading near its all-time low of 83.45-to-the-dollar mark. Any large withdrawal by FPIs could weaken the Indian currency further against other major currencies, the fund manager said.
The recent weakness in the US market, mainly due to rising inflation that weakened the chances of a rate cut by the US Fed and a below-part start to the earnings season, could also impact the sentiment on Dalal Street on Monday.
