Geopolitical developments, crude oil to steer stock market in holiday-shortened week: Analysts

According to fresh market updates, Market participants will focus on geopolitical developments, oil price marks, bond yields and macroeconomic data announcements to determine market trends during the holiday-shortened week ahead, market watchers stated.

Experts stated US-Iran diplomatic talks and oil price marks will drive global market sentiment.

Moreover, the market is likely to stay wary as oil price marks, geopolitical developments and global bond yields keep influence near-term direction, they stated.

Equity markets would stay closed on Friday for Mahatma Gandhi Jayanti.

"Globally, developments around US-Iran diplomacy and oil price marks will stay critical. Any progress on a framework for reopening the Strait of Hormuz could ease energy prices and provide some relief to India's import bill and the indian rupee, while renewed geopolitical tensions could keep volatility elevated," Ajit Mishra, SVP – Research, Religare Broking, stated.

On the domestic front, industrial production data for August and the HSBC manufacturing PMI reading will be released during the week, he further noted.

Additionally, traders at large will closely monitor foreign institutional investor (FII) activity and the upcoming monthly auto sales figures.

"Global bond yields will additionally stay important following the The US central bank's September policy decision. Further increases in yields and the dollar could weigh on emerging-market capital flows, while a moderation in yields could provide some relief.

"The indian rupee will stay another important factor to watch, with persistent oil-related demand for dollars and continued FII outflows potentially keeping the currency under pressure, although RBI intervention has helped contain excessive volatility," Ponmudi R, CEO – Enrich Money, an online trading and wealth tech firm, stated.

In addition, a series of economic data releases from the US will additionally be important for global risk sentiment, he further noted.

Last week, the BSE benchmark Sensex declined 399.22 points, or 0.53 per cent, and the NSE Nifty dipped 205.9 points, or 0.88 per cent.

"Brent crude near USD 105–106 a barrel stays too elevated to provide meaningful macroeconomic relief. Progress in the US-Iran negotiations could help reduce the geopolitical premium in crude prices, while renewed escalation or supply disruptions could intensify inflationary pressures.

"The US 10-year Treasury yield, at present near 5.2 per cent, will stay another important constraint on global risk appetite," Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Market observer firm, stated.

The combination of elevated crude prices, elevated yields and geopolitical uncertainty contributed to the sharp sell-off noted during the middle of last week, Ponmudi stated.

Elevated yields keep tighten global financial conditions and can reduce the relative attractiveness of emerging-market assets, he further noted.

According to Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services, markets will track India's August industrial production and the federal fiscal deficit for cues on domestic momentum and the consolidation path.

Globally, US consumer confidence and JOLTS job openings, and the eurozone September inflation cluster will shape expectations around the global rate cycle.