The Reserve Bank of India’s (RBI’s) interest rate decision, Middle East conflict and the trading activity of foreign investors are the key factors that will dictate investors’ sentiment in the market this week, analysts said.

Moreover, quarterly earnings from IT bellwether TCS, domestic macroeconomic data and movement in global oil benchmark Brent crude would also guide trends in the market.

Worsening tensions in the Middle East and foreign fund outflows were the major culprits behind the equity markets sharp fall last week.

“On the domestic front, the market’s focus will be on the RBI Monetary Policy Committee (MPC), which is scheduled to meet from October 7 to 9, 2024, with the outcome to be announced on Wednesday,” Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said.

The second quarter earnings season is kicking off with TCS, he said.

“Domestically, liquidity remains strong, with signs of sectoral rotation from overvalued segments to areas with more attractive valuations. Additionally, commodity prices, the US dollar index, and key US macroeconomic data will play a crucial role in determining market direction. Geopolitical developments will also continue to be a significant factor on the global front,” Gour added.

Last week, the BSE Sensex tanked 3,883.4 points, or 4.53 per cent, and the Nifty slumped 1,164.35 points, or 4.44 per cent.

“The new milestones of both Nifty50 and Sensex of 26,000 and 85,000, respectively were short-lived as the headwinds from the Middle East and flow of FII funds to cheaper Asian peers impacted the investor sentiment. During the last week, these benchmark indices corrected by more than 4 per cent,” Vinod Nair, Head of Research, Geojit Financial Services, said.

Market investors became poorer by Rs 16.26 lakh crore in five days of heavy correction in equities.

“The outlook for the market will be guided by major domestic and global economic data such as India’s interest rate decision, industrial production, US FOMC (Federal Open Market Committee) meeting minutes, initial jobless claims and the UK GDP data,” Palka Arora Chopra, Director, Master Capital Services Ltd, said.

Investors will be closely monitoring developments in the geopolitical situation and its impact on crude prices, said Ajit Mishra, SVP, Research, Religare Broking Ltd.

“The trend in foreign flows, along with domestic flows, will also be crucial. On the domestic front, the focus will be on the outcome of the upcoming MPC meeting on October 9,” Mishra added.

FPIs Withdraw Rs 27,142 Cr in 3 Trading Sessions of Oct on Geopolitical Tensions, Chinese Mkt Rebound

Foreign investors turned net sellers in October, offloading shares worth Rs 27,142 crore in just the first three days of October due to intensifying conflict between Israel and Iran, a sharp rise in crude oil prices, and improved performance of Chinese markets.

The outflow came after FPI investment reached a nine-month high of Rs 57,724 crore in September.

Since June, Foreign Portfolio Investors (FPIs) have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April, and May, data with the depositories showed.

(With PTI inputs)