- Indian benchmark indices are likely to remain volatile next week as investors track the first keynote address by US Federal Reserve Chairman Kevin Warsh, developments in the US-Iran conflict, and movements in crude oil prices.
- Crude oil futures ended higher on Friday, with Brent settling at $94.39 and WTI at $87.06, following US President Trump's threats of sanctions against countries trading with Iran.
- Despite Friday's marginal gains, both key indices posted weekly losses, with the Nifty declining around 0.47% and the Sensex slipping nearly 0.60% during the week.
- Fed Chair Kevin Warsh is set to deliver his much-awaited first keynote speech at the annual Jackson Hole Economic Policy Symposium on August 28, which will be closely scrutinised for clues on the central bank's policy direction.
- Geopolitical developments surrounding the US and Iran will remain under close watch, as Iran has criticized Washington's plans to impose new sanctions, warning that the measures could further weaken its economy.
- Although hostilities have largely eased since the US and Israel launched airstrikes on Iran on February 28, there has been limited clarity on a durable path towards peace negotiations.
- Oil shipments through the Strait of Hormuz have come to an almost complete halt, with Tehran warning that it could target unauthorized oil tankers attempting to pass through the strategically important waterway.
The Indian stock market is bracing for a turbulent week ahead as key factors such as Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Economic Policy Symposium, US-Iran tensions, and crude oil prices come into play.78
The Sensex closed at 77,540.83, gaining just 3 points, while the Nifty rose 20 points to finish at 24,252. However, both indices posted weekly losses, with the Nifty declining around 0.47% and the Sensex slipping nearly 0.60%.56
A significant focus will be on Warsh's address, which is expected to provide insights into the Fed's approach to persistent inflation risks and a softening labor market ahead of the September policy meeting. “Against a backdrop of volatile long-dated Treasury yields, Fed Chair Kevin Warsh's address at the Jackson Hole symposium on Friday, August 28, will be closely scrutinised for clues,” noted Ponmudi.
Meanwhile, geopolitical developments surrounding the US and Iran are under close watch. Iran has criticized Washington's plans for new sanctions, warning that they could further weaken its economy and impact key trading partners like China. “Hostilities have largely ceased, but there are still no clear indications that either side is moving toward peace negotiations,” analysts noted.9
Crude oil prices are also a major concern, with Brent crude settling at $94.39 a barrel, up 6.39% for the week. High oil prices could pressure India's inflation and current account, given its reliance on imported crude.
Foreign institutional investors (FIIs) remained net sellers, offloading equities worth ₹542.71 crore on August 21, while domestic institutional investors (DIIs) continued their buying spree, purchasing equities worth ₹2,124.14 crore.
“Brent crude settled at $94.39 a barrel, up 6.39% for the week, after Trump threatened sanctions on Iran's trading partners. FIIs offloaded ₹542.71 crore in Indian equities on Friday, while DIIs bought ₹2,124.14 crore, reflecting mixed investor sentiment.”
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