Developments surrounding the war in West Asia and movement in crude-oil price will be the major factors driving trends in the equity markets this week, as well as the US Federal Reserve's decision on interest rate, and inflation, according to analysts.
"This week is packed with several important developments and data releases, both domestically and globally. Geopolitical developments will remain the key factor to watch, as their impact on crude oil prices is likely to influence overall market direction.
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"On the domestic front, market participants will closely track key macroeconomic indicators, such as WPI inflation, balance of trade data and foreign exchange reserves," Ajit Mishra, senior vice president of research at Religare Broking Ltd, said.
Globally, investors will focus on the US Federal Reserve's interest rate decision and the Federal Open Market Committee economic projections, he added.
Last week, the BSE benchmark Sensex tanked 4,354.98 points or 5.51%, and the NSE Nifty dropped 1,299.35 points, or 5.31%.
Indian equity markets ended the week under significant corrective pressure as global risk sentiment deteriorated amid rising crude oil prices, escalating geopolitical tensions in West Asia, and persistent selling by foreign institutional investors, Hariprasad K, research analyst and founder of Livelong Wealth, said.
Since February 27, the 30-share BSE benchmark has nosedived 6,723.27 points or 8.27%.
The US-Israel and Iran conflict escalated from February 28. The conflict has led to a blockade of the Strait of Hormuz, the main transit route for Gulf energy supplies.
"The week ahead is expected to remain highly volatile, with market direction largely influenced by developments surrounding the ongoing conflict in the Middle East. Particular focus will remain on the Strait of Hormuz, a critical energy chokepoint, where any prolonged disruption to shipping could tighten global oil supplies, influence inflation expectations across Asia, and keep overall risk sentiment fragile," Ponmudi R, chief executive officer of Enrich Money, an online trading and wealth tech firm, said.
Additionally, FII flows and movements in the rupee will remain key indicators, as global capital allocation toward emerging markets, like India, continues to be influenced by geopolitical developments and commodity price volatility, he added.
Foreign investors withdrew Rs 52,704 crore (approximately $5.73 billion) from domestic equities in the first fortnight of March amid escalating tensions in West Asia, the depreciation of the rupee and concerns over the impact of high crude oil prices on India's growth and corporate earnings.
Siddhartha Khemka, head of research-wealth management at Motilal Oswal Financial Services Ltd, said, "Key economic releases this week include Eurozone CPI, the Fed interest rate decision, BoE (Bank of England) and ECB (European Central Bank) policy decisions, and the US jobs data"
(With inputs from PTI)
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