Indian stock markets brace for a volatile week as India-Pakistan tensions, Q4 earnings, FII actions, and global cues steer sentiment.

India-Pak Tensions, Q4 Results & Global Cues: What Will Drive D-Street This Week

As Indian equity markets head into a new trading week, investors are buckling up for a bumpy ride. Last week closed with modest gains of 0.8%, primarily driven by the IT sector, and bolstered further by strong showings from pharma and auto stocks. However, with multiple critical domestic and global factors on the horizon, the landscape looks poised for heightened volatility.

The benchmark Nifty 50 slipped 207.35 points, or 0.86%, to end Friday at 24,039.35, hinting at underlying caution. Senior Technical Analyst Rupak De of LKP Securities noted the Nifty’s fall below its 200-day moving average, suggesting a possible return to bearish territory. “Investor sentiment has clearly taken a hit, with a risk-off mood dominating ahead of the weekend amid escalating tensions between India and Pakistan,” De explained. He identified key support levels at 23,800 and 23,515, areas that traders will closely monitor.

India-Pakistan Tensions Loom Over Markets

Geopolitical risks have once again cast a shadow over Indian markets. Heightened calls for retaliatory action against Pakistan after recent incidents have unsettled investors, bringing back memories of the 2019 military strikes. While direct conflict remains a worst-case scenario, even the hint of escalation between the nuclear-armed neighbors could drive risk aversion and volatility across D-Street. Markets dropped on Friday as tensions simmered, and this nervousness is likely to linger into the new week.

Earnings Season Enters High Gear: 180+ Companies to Report

Adding another layer of unpredictability, over 180 companies are scheduled to announce their Q4FY25 earnings this week. Heavyweights like TVS Motor, UltraTech Cement, Bajaj Finance, Vedanta, and Kotak Mahindra Bank are among the key players that could significantly sway sentiment. Reliance Industries, which posted its results after Friday’s close, will also remain a focal point for investors dissecting sectoral strength.

In addition, stock-specific action is expected around IDFC First Bank and India Cements, both of which released their quarterly results over the weekend. Analysts caution that disappointing numbers from major companies could amplify existing fears and trigger sharper selloffs.

Global Markets Offer Some Optimism

Despite domestic challenges, Wall Street’s performance could offer some relief. The Dow Jones Industrial Average closed marginally higher at 40,113.50, while the S&P 500 and Nasdaq posted healthy gains, rising 0.74% and 1.26%, respectively. A buoyant Wall Street typically bodes well for emerging markets, although geopolitical worries could cap any upside for Indian equities.

FII-DII Tug-of-War Continues

Foreign Institutional Investors (FIIs) remained net sellers on Friday, offloading shares worth ₹2,952.33 crore, according to exchange data. However, Domestic Institutional Investors (DIIs) stepped up, buying shares worth ₹3,539.85 crore. This battle between foreign and domestic flows will be critical in determining short-term trends. If FIIs continue their selling spree, Indian equities could find it hard to sustain any rally.

Technical Outlook: Cautious Optimism Amid Volatility

Technically, analysts see mixed signals. Bajaj Broking Research pointed out that the Nifty formed a bullish weekly candle despite Friday’s drop, signaling an ongoing positive bias. However, profit booking at higher levels suggests resistance ahead. A breakout above 24,365 could open doors to 24,550, while failure could mean a consolidation phase between 23,500 and 24,350. Analysts warn that volatility will likely remain high due to geopolitical events, earnings surprises, and global developments.

Currency Watch: Rupee Weakens Amid Uncertainty

The Indian rupee slipped 0.2% against the U.S. dollar on Friday, ending at 85.45. It struggled to breach the psychological resistance at 85, weighed down by month-end dollar payments and fears of worsening India-Pakistan tensions. If tensions escalate further, the rupee may see additional downside pressure, impacting import costs and inflation expectations.

IPO Buzz: Ather Energy and SME Listings in Focus

Despite the broader market’s jitters, the IPO market remains active. Ather Energy’s much-anticipated IPO opens April 28, targeting a ₹3,000 crore fundraise with shares priced between ₹304 and ₹321. Meanwhile, SME players Arunaya Organics and Kenrik Industries will also launch their IPOs this week, adding options for investors seeking exposure to smaller companies.

Commodities Check: Crude Oil and Gold in Spotlight

Oil prices have inched higher, with WTI closing at $63.17 and Brent at $66.87. While gains remain modest, any sharp spike could worsen inflation worries for India, the world’s third-largest oil importer. On the flip side, gold continues to glitter, up nearly 24% year-on-year, despite a pullback from its record highs. Safe-haven demand for gold could strengthen if geopolitical tensions worsen or the rupee weakens further.

Conclusion: A High-Stakes Week for D-Street

This week presents a complicated chessboard for Indian investors. Geopolitical uncertainties, a flood of corporate earnings, volatile global cues, and crucial technical levels are all pieces that must fall into place. While opportunities for gains exist, so do significant risks. Staying nimble, closely tracking developments, and maintaining a diversified portfolio could be the smartest strategies as D-Street navigates another potentially turbulent week.

Disclaimer:

The views, opinions, and recommendations expressed in this article are for informational purposes only. They do not represent the official stance of The Economic Times or any associated parties. Investors should consult financial experts before making any investment decisions.

source : The Economic Times