Indian equity markets enter the final week of September under pressure after the benchmark indices extended their losing streak to seven consecutive weeks.
The Nifty 50 fell 0.88% to 23,140.50, while the Sensex declined 0.54% to 73,895.74 in the week ended September 25. The elevated crude oil prices, higher US Treasury yields, foreign investor selling and geopolitical uncertainty remained key factors weighing on sentiment.
With the September quarter drawing to a close, investors are likely to track a combination of global developments, domestic economic data, monthly auto sales and foreign portfolio flows for the next directional cues.
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Crude Oil And US-Iran Developments In Focus
Crude oil is likely to remain one of the biggest variables for Indian equities. Brent crude settled at $104.32 a barrel on September 25 after falling 2.1% during the session, as markets responded to reports that the US and Iran were exploring a phased path towards ending the conflict, including the possible reopening of the Strait of Hormuz.
For India, sustained high oil prices can increase the import bill, put pressure on the rupee and complicate the inflation outlook.
Conversely, any credible progress towards restoring flows through the Strait of Hormuz could ease energy prices and provide some relief to currency and equity markets.
Ajit Mishra, SVP–Research at Religare Broking, said crude oil prices and geopolitical developments will remain critical for the market, with volatility likely to stay elevated until greater clarity emerges.
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Auto Sales To Provide Fresh Demand Signals
Monthly automobile sales figures will be another important trigger as investors assess festive-season demand. India's auto sector has entered the period with strong momentum.
SIAM data showed passenger vehicle sales of 4,39,309 units in August, up 36.5% year-on-year, while FADA reported total retail automobile sales of 24.23 lakh units, a record for August.
Recent industry commentary suggests demand remains healthy, particularly for SUVs and mid-range two-wheelers, although inventory constraints at dealerships could limit the extent to which strong bookings translate into actual deliveries during the festive period.
Auto stocks, therefore, could see stock-specific activity as investors assess September volumes and the sustainability of consumer demand.
IIP, Manufacturing PMI Among Key Domestic Data Points
The domestic macroeconomic calendar will also remain busy. India's August Index of Industrial Production is scheduled for release on September 28. The previous reading showed IIP growth of 7.3% in July, while June growth was revised to 7.8%.
The HSBC Manufacturing PMI will also be watched closely. India's manufacturing PMI fell to 52.8 in August, its weakest expansion in five years, according to Reuters, with slower new-order growth and a marginal decline in factory employment adding to concerns over demand conditions.
Investors will therefore look for signs of whether industrial activity and manufacturing momentum strengthened in August.
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FPI Flows, US Yields And Rupee In Focus
Foreign investor activity remains another important market variable. FPIs were net sellers of Rs 11,490 crore in equities between September 21 and 25 based on provisional NSE data.
However, settled depository data showed a more nuanced picture, with net equity inflows of Rs 3,843 crore, supported by substantial primary-market investments.
Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, noted that foreign investors sold around Rs 2,006 crore in secondary equities during the week while deploying approximately Rs 5,848 crore into primary-market opportunities.
Global bond yields will also remain on the radar. A combination of higher US yields, elevated crude and a weaker rupee could continue to influence foreign allocation towards Indian equities.
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