From the US Fed meeting to crude oil, find out what will affect the market next week and what investors should do.
The biggest event that will determine the market's direction in the coming week is the US Federal Reserve meeting, scheduled for June 16 and 17.
Although the chances of any change in interest rates in this meeting are very low, investors will be focused on the Fed's statement and future signals.
The market will want to know what the US central bank thinks about inflation, economic growth, and the future path of interest rates.
If the Federal Reserve's stance remains aggressive or 'hawkish', it could be a negative signal for global markets.
This will have a direct impact on the flow of Foreign Portfolio Investors (FPIs), who are already pulling money out of Indian markets.
Fears of a tight monetary policy could strengthen the dollar, which would also increase pressure on the rupee. Therefore, every word from the Fed will be crucial for the market.
The whole world is watching the ongoing nuclear deal negotiations between the US and Iran. Any news from this front could cause a major stir in the market.
The US President recently indicated that a peace deal could be reached between the two countries soon.
If this agreement becomes a reality, it will be a major positive news for global peace and stability.
This agreement will reduce geopolitical tensions in the Middle East, which will directly benefit the stock markets.
The biggest impact will be on crude oil prices. The lifting of sanctions on Iran will increase the supply of oil in the global market, bringing prices down.
However, Iran has stated that no final date has been set yet. Therefore, uncertainty will remain in the market until a concrete announcement is made.
Crude oil is one of the most sensitive factors for the Indian economy and the stock market. India imports more than 85% of its oil needs.
In recent days, Brent crude prices have softened, which is a major relief for India.
Lower oil prices reduce the country's import bill, which helps in controlling the Current Account Deficit (CAD).
Cheaper crude oil directly affects petrol and diesel prices, which helps to curb inflation.
Additionally, crude oil is a key raw material for many companies in sectors like paints, tires, aviation, and logistics.
A decrease in oil prices reduces the costs for these companies and increases their profits, which has a positive impact on their stocks.
But if tensions in the Middle East escalate again, oil prices could rise again, which would be a major blow to the market.
Foreign Portfolio Investors (FPIs) are continuously selling in the Indian stock market. This remains a matter of concern for the market.
On Friday as well, FPIs made net sales of over Rs 1,000 crore. Due to global uncertainties, foreign investors are withdrawing money from emerging markets.
However, this selling pressure has been largely absorbed by Domestic Institutional Investors (DIIs).
DIIs, which include mutual funds and insurance companies, are continuously buying. This is the reason why there has been no major fall in the market.
The stance of FPIs will be very important for the market in the coming days. If they stop selling and start buying, a new rally could be seen in the market.
Last week, the Indian rupee performed impressively against the dollar. The rupee strengthened by 67 paise, which is good for investor sentiment.
There were several reasons behind this strength of the rupee, such as the fall in crude oil prices and weakness in the dollar index.
A market expert said, "If there is no bad news on the geopolitical front and crude oil prices remain under control, the rupee could strengthen further."
A strong rupee also boosts the confidence of foreign investors, as it improves their returns.
It also helps in reducing imported inflation, which provides relief to the RBI.
Overall, the coming week could be quite volatile for the Indian stock market. Investors should keep a close watch on these five key factors and exercise caution before making any major decisions. The market's direction will be largely influenced by global cues.
*Edit with Google AI Studio
जोगेन्द्र सिंह शेखावत
