Will Nifty and Sensex fall for sixth consecutive session on Monday? US Fed in 5 Factors to Watch This Week

The Indian stock market extended losses for the fifth straight session. Sensex and Nifty tumbled more than 1% in intraday before paring most of the losses and closed 0.4% lower each on Friday, as oil prices rose above $100 a barrel, FII selling and other factors spooked investors.

Here are 5 factors that will determine the market mood:

1) US Fed meeting – The Federal Reserve’s next meeting on July 28-29 is expected to provide fresh signals on the future path of interest rates amid rising oil prices and concerns over threats to the Strait of Hormuz amid the US-Iran war.

The meeting comes as rising tensions in the Middle East have pushed Brent crude prices above $100 a barrel. Rising oil prices fueled concerns that the Fed may need to take a more aggressive approach to interest rates to curb inflation, which has remained above the central bank’s 2% annual target.

The Fed is widely expected to keep interest rates unchanged when it announces its monetary policy decision on Wednesday. However, Fed funds futures were pricing in a 38% chance of a 25-basis-point rate hike, according to LSEG data available late Friday. There is still some uncertainty on Wall Street about whether the central bank can surprise markets, especially as new Fed Chair Kevin Warsh moves to overhaul the way the Fed communicates its monetary policy.

The upcoming meeting will be the second under Warsh, who has refrained from giving further guidance, maintaining his commitment to bring inflation back to the Fed’s 2% target.

2) Rising oil prices – Crude oil rose 10% this week after the US-Iran conflict escalated, with the US military attacking Iran for the 13th night in a row. At the same time, the Iran-aligned Houthis said they attacked two Saudi oil tankers in the Red Sea and announced a naval blockade of Saudi Arabia. The recent surge has unsettled investors, offering markets short-term relief after a fragile truce.

Oil prices rose above $100 a barrel for the first time this week after Houthi attacks on two Saudi tankers. The strike has raised concerns that the Bab al-Mandeb shipping route could be closed, threatening another key energy transport channel.

3) Q1 results – Adani Enterprises, Adani Ports, Asian Paints, Bajaj Housing Finance, Dabur, Eicher Motors, Garden Reach, L&T, HUL, Suzlon, Tata Capital, Sun Pharma, Bharat Electronics, Canara Bank, Coal India, Coforge, Godfrey Phillips, Tapita Mines, Tapita, Happy, Happy, Tata Capital Big companies like Other companies including Power, Tejas Networks and Ambuja Cement will declare results. Investors will closely track management commentary and brokerage reactions for signs on the road ahead.

4) FII-DII activity – Foreign Institutional Investors (FIIs) were net sellers during the current week, with Rs. 7,180 crore in sales, according to provisional exchange data. Domestic Institutional Investors (DIIs), meanwhile, remained net buyers, with Rs. 8,640 crore invested.

FII flows are likely to remain volatile until there is more clarity on geopolitical developments and continued stability in crude oil prices. These factors will be crucial to restore investor confidence and improve the outlook for equity markets.

5) Indian Rupees – The Indian rupee weakened for the fourth straight week, falling by Rs. After failing to sustain its recovery from recent highs around 96.10 against the US dollar, Rs. Ended near 96.55. Rising crude oil prices, geopolitical uncertainty and strong demand for the US dollar reversed much of the currency’s earlier gains.

For USD/INR pair, Rs. 96.60- Rs. The 96.67 range is a major resistance area. A sustained break above this level will push the rupee lower to Rs. 96.90, with Rs. 97 may emerge as the next major level to watch. On the downside, Rs. 96.50-Rs. A move below the 96.45 zone was Rs. 96.20-Rs. 96.30 may support a recovery, while Rs. 96 is an important medium-term support level, experts say.

Market Estimates

From a technical perspective, the index is currently trading below its key short- and long-term moving averages, while the 20-day and 50-day EMAs are trending lower, reflecting weakness. Sudeep Shah of SBI Securities says the daily RSI is hovering around the 43 mark and remains below its 9-day moving average, indicating slow momentum.

Meanwhile, the MACD histogram continues to remain below the zero line, reinforcing the prevailing bearish undertones. With momentum still tilted in favor of the bears, the battle now shifts to a crucial support zone that could determine the index’s next directional move.

Going forward, the 23,650–23,600 zone will act as an important support area for the index. A sustained move below 23,600 could extend the correction towards 23,450, followed by 23,300 levels. On the upside, the 50-day EMA zone of 23,950–24,000 is likely to act as an important barrier.

(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)