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Domestic markets are likely to remain volatile on Monday due to the escalation of geopolitical tension between Iran and Israel. Gift Nifty at 22,467 against NIfty futures close of 22,601, signalling a gap down of about 130 points for Nifty.
Shrey Jain, Founder and CEO of SAS Online - India’s Deep Discount Broker, said that the escalation of conflict and seizure of a cargo ship by Iran may increase volatility in the global equity markets, including India. The world will watch the response by Israel and the G7.”
“Further escalation in the conflict may lead to a hike in crude oil prices and in turn push inflation upwards. This reduces the chances of rate cut and in turn valuations of stocks, including Indian equities, especially at a time when they are not trading cheap,” he added.
According to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the surcharged geopolitical situation will keep the markets on tenterhooks in the near term.
“The hotter-than-expected inflation in the US has dashed hopes of three rate hikes by the Fed in 2024. Now the market is pricing in only two rate cuts, that too, towards the end of the year. Consequently, the 10-year bond yield has spiked to 4.52 per cent, triggering more FPI outflows from EMs like India,” he cautioned
In brief, the coming few days will be tough for FPI, which might see more outflows. He added that “since DIIs are sitting on huge liquidity and the retail and HNIs in India are highly optimistic about the Indian market, FPI selling will be largely absorbed by domestic money.”
Meanwhile, equities across the Asia-Pacific region fell around 1 per cent, except for Chinese markets.
Santosh Meena, Head of Research, Swastika Investmart Ltd, said: this week promises to be crucial for the market as fresh worries about a potential conflict between Iran and Israel emerge. Any significant escalation in tensions could trigger panic selling and volatility in global equity markets, he said, adding that the market will also be closely monitoring the movement of crude oil prices, which are often impacted by geopolitical events.
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