NEW DELHI: Indian stock markets are likely to remain volatile and consolidate this week as investors track September inflation data, quarterly earnings from major companies, crude oil prices and global economic cues. Foreign investor flows, rupee movements, US Treasury yields and geopolitical developments will also influence sentiment, analysts said.After eight consecutive weeks of declines, the Nifty-50 gained 0.43 per cent last week, while the Sensex rose 0.78 per cent, signalling some stabilisation. However, elevated crude oil prices and continued foreign institutional investor (FII) selling could limit the recovery.“Indian equities are expected to consolidate this week as markets balance improving domestic earnings momentum against elevated global risks. Brent crude remains above USD 100 per barrel and sustained FII selling continues to weigh on sentiment. After eight consecutive weeks of declines, the Nifty-50 gained 0.4 per cent last week, suggesting some stabilisation at lower levels, although the broader market is likely to remain selective,” Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, as quoted by PTI.
Inflation data in focus
Investors will closely track India’s September consumer price index (CPI) and wholesale price index (WPI) inflation figures for clues about price pressures and the Reserve Bank of India’s monetary policy outlook.“September CPI inflation will be the first major domestic test this week. A stronger-than-expected reading could revive concerns over further RBI tightening, putting rate-sensitive sectors such as banking, automobiles and real estate under pressure while raising the risk of a broader drag on consumer demand.“A softer print could ease concerns over the eventual peak in interest rates, but any relief may prove short-lived if Brent crude remains above USD 100 a barrel. Wholesale price inflation data will offer a further indication of how elevated energy and logistics costs are filtering through to producer prices,” Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said.Global economic indicators will add to the market cues, with US inflation and retail sales data likely to influence Treasury yields and the dollar. Investors will also monitor eurozone inflation and UK GDP data, alongside developments in the global jobs market.
IT earnings to set the tone
The September-quarter earnings season will gather pace this week, with results from HCL Technologies, Wipro and Tech Mahindra among the likely key triggers for the market. Investors will look for signs of sustained demand, deal momentum and management guidance to assess whether the recent recovery in IT stocks can continue.IT shares led Friday’s market rebound, with TCS rallying more than 4 per cent after reporting better-than-expected September-quarter results. The gains helped lift the broader indices after weeks of pressure.The sector had also faced concerns following reports that the US suspended eight IT firms, including TCS, Infosys, Wipro, Cognizant and Microsoft, from a programme linked to green card applications for foreign workers. The programme’s critics have argued that it disadvantages American workers.TCS said on Friday that the US action was not expected to affect its workforce strategy or customer engagements. The company cited the small number of applications it had made under the programme over the past two years and its focus on local hiring.“The IT sector will remain in focus as HCL Technologies, Wipro and Tech Mahindra report their September quarter results. The sector staged a sharp rebound on Friday following TCS’s better-than-expected earnings, but whether the recovery gains traction will depend on the performance of its peers and their outlook for the coming quarters,” Radhakrishnan said.Other companies scheduled to announce results this week include BHEL, Canara Bank, HDB Financial Services, HDFC Asset Management Company and Nestle.Crude oil and geopolitical risks remain key concernsCrude oil prices will remain a major macroeconomic factor for Indian equities, given the country’s exposure to imported energy. Brent crude trading above USD 100 per barrel could add to inflationary pressures, weigh on corporate margins and complicate the outlook for interest rates.Uncertainty surrounding Iran, the Strait of Hormuz and regional energy infrastructure has kept concerns over potential supply disruptions elevated.“Corporate earnings will increasingly influence sector-level performance as the September quarter results season gathers pace. TCS’s results helped trigger a rebound across IT stocks, supporting the broader indices on Friday. Crude oil remains the biggest macroeconomic risk. Uncertainty over Iran, the Strait of Hormuz and regional energy infrastructure continues to leave global supply vulnerable to disruption,” Ponmudi R, CEO of Enrich Money, said.Alongside oil prices, investors will monitor foreign institutional investor activity, movements in the rupee and US Treasury yields for indications of capital flows and broader risk appetite.