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Indian stock markets are likely to witness volatility when trading resumes on Monday, with analysts noting that investor sentiment could hinge on the disappointing negotiations between the US and Iran, which concluded on Sunday without reaching an agreement to end the war.
US Vice President JD Vance stated that while substantive discussions took place during the talks, the lack of agreement is "bad news for Iran more than it's bad news for the United States of America". According to Ponmudi R, CEO of Enrich Money, the overall sentiment is "balanced but cautious," with the downside relatively contained but upside momentum constrained. Foreign institutional investors (FIIs) have been net sellers, with cumulative weekly outflows of over Rs. 20,700 crore, although they turned net buyers in Friday's session, he said. "A renewed escalation in tensions or a sharp rebound in oil prices could reintroduce downside risks. Conversely, continued moderation in crude prices, alongside supportive global cues, may prompt short-covering and lend near-term support to markets," Ponmudi R said. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said that Foreign Portfolio Investors (FPI) selling has continued in April, with total outflows reaching Rs 1,90,046 crore. The energy crisis triggered by the West Asia conflict, potential impact on the Indian economy, and sustained rupee depreciation have kept FPIs on sell mode. Experts believe that if there's de-escalation in the conflict and crude prices decline significantly, India's macros won't be impacted materially. However, if the conflict prolongs, India's macros will be affected, making it unrealistic to expect FPIs to turn buyers. Domestic institutional investors have provided crucial support, with net inflows of Rs 21,600 crore, absorbing selling pressure and stabilizing indices near key support levels. Vijayakumar noted that strong mutual fund flows into the market, with equity mutual flows surging to Rs. 40,450 crore and monthly SIP inflows to Rs. 32,087 crore in March, bode well for the market. (ANI)
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