The market stayed under the severe selling pressure for sixth consecutive week, falling around half a percent for the week ended April 2 and losing over 11 percent in last six weeks as bears are not letting the charge of Dalal Street despite intermittent attempt of bulls. Trump's renewed threat to strike Iran extremely hard, rising US Treasury yields, stronger dollar, Brent crude above $100 per barrel revived imported inflation fears and India's Manufacturing PMI at four-year low weighed the market down, though the rupee recovered sharply on RBI measures.
The coming week starting from April 6 is also expected to remain weak with elevated volatility until there is a concrete news development with respect to de-escalation of war and opening of Strait of Hormuz. In between, the week ahead is also loaded with high-impact triggers across global and domestic fronts including the RBI monetary policy, start of corporate earnings season, US GDP and inflation, FOMC minutes, and China inflation numbers, according to experts.
The BSE Sensex fell 264 points (0.36 percent) during the week to 73,320, and the Nifty 50 slipped 107 points (0.47 percent) to 22,713, while the Nifty Midcap 100 index was down 0.78 percent and the Nifty Smallcap 100 index gained 0.2 percent. Selling was widespread across all sectors, with IT being the lone exception
"So long as Middle East remains a live powder keg, markets will continue to trade on headlines rather than fundamentals, keeping volatility elevated and directional clarity elusive," Vinod Nair, Head of Research at Geojit Investments said.
Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services also agreed with Vinod Nair saying overall, market sentiment remains fragile and depends on the developments in the US–Iran conflict, with crude oil prices and foreign fund flows expected to remain key drivers of market direction in the near term.
Here are 10 key factors to watch next week:
West Asia War and Oil Prices
The ongoing West Asia conflict, elevated oil prices, and their impact on global economies and corporate earnings will be the most important factors to watch globally. The United States and Israel continue to carry out strikes on Iran, which has led to the blocking of the Strait of Hormuz—a crucial waterway responsible for transporting around 20 percent of the global oil supply. On the other hand, Iran has been retaliating by targeting Israel and other parts of the Middle East, including U.S. bases.
Donald Trump has issued a harsh warning of severe military action targeting critical infrastructure if Iran fails to reopen the Strait of Hormuz. However, with Iran rejecting the 48-hour ceasefire proposal from the United States and signaling a harder stance, geopolitical tensions are likely to remain the dominant driver of risk sentiment in the near term.
Meanwhile, according to CNN reports, representatives from Oman and Iran have met to discuss “possible options” for allowing ships to pass through the Strait of Hormuz. More than 180 ships have successfully transited the strait since the outbreak of the conflict, compared to around 140 ships that used to pass through the strait daily.
Brent crude prices, the international benchmark for oil, have remained above the $100-per-barrel level for four consecutive weeks, with all key moving averages trending upward. Prices ended 2.78 percent higher for the recent week at $109.23 per barrel, as markets are pricing in a growing risk of sustained supply disruptions, particularly around the Strait of Hormuz.
Global Economic Data
Globally, apart from geopolitical tensions and elevated oil prices, the market participants will also focus on the FOMC minutes, and the economic releases like weekly jobs data, quarterly GDP growth & Core PCE prices, and inflation for March from the United States for further clues on the Fed policy outlook.
In March meeting, the Federal Reserve kept the fed funds rate unchanged at 3.5-3.75 percent with policymakers still expecting one more rate cut in current year and another in 2027. But most economists are not expecting any rate cut given the escalated geopolitical tensions and fear of inflation concerns with rising oil prices, rather there is a possibility of rate hike.
US GDP growth for Q4-CY25 is likely to be sharply lower from 4.4 percent seen in Q3, while the inflation is expected to inch higher for March from 2.4 percent in February.
Meanwhile, inflation and PPI numbers for March from China will also be watched next week.
RBI Monetary Policy
Back home, the Reserve Bank of India Monetary Policy Committee (RBI MPC) will conclude its three-day monetary policy meeting on April 8 with likely maintaining status quo on repo rate at 5.25 percent and 'neutral' policy stance. The Governor's commentary on the rate cycle trajectory and FY27 projections will be closely monitored. In fact, now most economists expect no rate cut at least in current financial year but rather there is a possibility of rate hike in the range of 25-50 bps considering escalated geopolitical tensions in the Middle East and elevated oil prices.
In the commentary, the RBI is likely to maintain a balanced stance, acknowledging external risks while focusing on domestic stability. The emphasis will be on inflation trajectory, liquidity management, and currency stability. Rather than signaling aggressive policy shifts, the central bank is expected to retain flexibility and respond as conditions evolve, said Puneet Sharma of Whitespace Alpha.
Q4 Earnings
The much-awaited March 2025 quarter earnings season will kick off next week by Tata Consultancy Services on April 9. On the same day, Anand Rathi Wealth, and GM Breweries will also release their quarterly numbers.
According to experts, the Q4FY26 is expected to be a relatively mixed quarter with certain sectors likely face margin pressures due to higher input costs (especially after spike in oil prices in March due to Middle East tensions) and currency volatility, while others could continue to benefit from stable demand conditions. The impact of March volatility is more likely to reflect in management commentary, forward guidance, and cautious outlooks rather than sharply in reported numbers.
Domestic Economic Data
On the economic data front, HSBC Services PMI final data for March is scheduled on April 6. According to preliminary numbers, the services PMI dropped to 57.2 in March from 58.1 in previous month, partly impacted by geopolitical tensions in the Middle East which raised inflation concerns and affect international travel activity.
Further, bank loan and deposit growth for fortnight ended March 20, and foreign exchange reserves for week ended April 3 will be released on April 10. The forex reserves have been declining since the beginning of March especially after the onset of the West Asia conflict, down by US$10.288 billion to US$ 688.06 billion in the week ended March 27 from US$698.4 billion. It dropped US$40.43 billion from record high of US$728.49 billion at the end of February amid RBI's intervention by selling dollar to stabilise the weakening rupee.
Indian Rupee
The movement in rupee, which has come under pressure since the start of the West Asia conflict followed by its sharp recovery last week, will also be watched in the coming week.
The currency consistently depreciated from a level of 90.50 against the US dollar in the second week of February to hit a record low of 95.225 on March 30 due to persistent withdrawal of foreign capital, and rising crude oil prices amid geopolitical tensions in the West Asia, before showing sharp recovery of 2.68 percent in the last five straight sessions (from all-time low) especially after the Reserve Bank of India announced several measures to restrict banks from onshore forward markets. The rupee closed at 92.67 a dollar, appreciating 2.2 percent during the week passing by.
But Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities believes this recovery appears more of a technical pullback after sharp depreciation rather than a trend reversal. "Uncertainty remains elevated, keeping volatility high in currency markets."
FII Flow
The market will also keep an eye on the mood of Foreign Institutional Investors (FIIs) which remained negative. They net sold more than Rs 29,000 crore worth shares last week, becoming consistent sellers from February 26 offloading total shares worth over Rs 1.5 lakh crore in 23 straight sessions, as per provisional data. In March, their outflow was over Rs 1.22 lakh crore, the biggest-ever in a month, amid oil prices trading above $100 a barrel, continuation of war in the Middle East and dollar appreciation.
The US dollar index closed above 100 mark for the second consecutive week, closing 0.01 percent down for the recent week and maintaining above 50-week EMA for fourth straight week but is yet to reclaim 100 and 200-week EMA.
According to experts, as long as the oil prices remain elevated amid escalation in the West Asia war, the FPI flow may remain on the negative side, and the rupee is expected to be fundamentally weak.
On other side, Domestic Institutional Investors (DIIs) consistently provided strong support to equities, almost offsetting FII outflow in recent week and buying nearly Rs 1.75 lakh crore from February 26.
IPO Action
Meanwhile, the major action is unlikely in the primary market for second consecutive week as only two initial public offerings (IPOs) - one each in the mainboard and SME - are set to hit Dalal Street next week, largely impacted by the cautious mood of the secondary market. Propshare Celestia's Rs 245-crore public issue will open on April 10, while the subscription for Rs 48-crore SME offer by Safety Controls & Devices will start on April 6.
Emiac Technologies' public issue will remain open till April 8, while Vivid Electromech will be the only company making debut next week on April 7 after IPO.
Technical View, F&O Cues, India VIX
Technically, the setup remains in favour of bears as the selling pressure at higher levels remains strong than there was buying at lower levels, with the Nifty 50 trading well below all key moving averages with bearish signal from momentum indicators. In fact, the index reached closer to 200-week EMA with continuation of lower high-low formation. The recent week's low of 22,182 is expected to be immediate key support for the index, however, the 23,000 is likely to be crucial hurdle on the higher side as decisively breaking either of levels can give further direction.
The weekly options data suggested that the Nifty 50 is expected to be in the 22,000-23,000 range in the upcoming sessions. The maximum Call open interest was seen at the 23,000 strike, followed by the 23,500 and 23,200 strikes, while the 22,000 strike holds the maximum Put open interest, followed by the 22,500 and 22,300 strikes. The maximum Call writing was observed at the 23,000, 23,200 and 22,200 strikes, while the 22,000, 22,300 and 22,200 strikes saw maximum Put writing.
Meanwhile, the fear gauge India VIX sustained at elevated zone despite 4.8 percent fall to 25.52 zone after 98 percent surge in previous four straight weeks, signalling major discomfort for bulls. It is necessary for the volatility index to convincingly fall below 20 level for the bulls to start getting back into comfort zone.
Corporate Action
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.