New Delhi, April 5 The domestic stock market is expected to remain volatile this week as investors track the Reserve Bank's monetary policy decision, key global macroeconomic data, and the impact of the West Asia conflict, analysts said.
Movements in crude oil prices and foreign fund flows will also influence domestic equities, they added.
Vinod Nair, Head of Research, Geojit Investments Ltd, said the RBI's Monetary Policy Committee (MPC) meeting will be the main focus domestically, with investors closely watching the central bank's stance on inflation and growth.
"A rate pause is the near-certain consensus. The central bank is walking a tightrope between crude-driven inflation risks and a four-year low Manufacturing PMI signaling a softening growth impulse. Investors will closely monitor the governor's commentary on the rate cycle trajectory and FY27 projections," he said.
"Globally, the US March CPI reading will be of significant importance, as it effectively ends any remaining hopes for Fed rate cuts, strengthens the dollar, and tightens financial conditions for emerging markets, including India," Nair said.
He noted that geopolitical developments in West Asia will remain the overarching factor influencing market sentiment.
"Indian markets will return after a three-day gap and remain highly vulnerable to weekend developments, with crude price trajectory and any credible ceasefire signal being the key variable that could either trigger a sharp rally or extend the current sell-on-rise mode," Nair added.
In a shortened week due to a holiday, the BSE benchmark Sensex declined by 263.67 points, or 0.35 per cent, and the NSE Nifty fell by 106.5 points, or 0.46 per cent.
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said Indian equities are likely to remain volatile this week, with investor sentiment closely tied to evolving developments in the ongoing West Asia conflict.
Brent crude prices have remained elevated near USD 107 per barrel, sustaining concerns around imported inflation. Currency pressures have also intensified, with the rupee weakening sharply before recovering towards Rs 93 against the US dollar, aided by RBI intervention, he added.
Foreign institutional investor (FII) selling remains another key overhang, with March witnessing intense outflows of Rs 1.2 lakh crore, among the highest monthly outflows in the last several years.
"Investors will monitor the US Federal Open Market Committee (FOMC) meeting minutes, GDP data, and initial jobless claims for further cues on growth and the policy trajectory," Khemka said.
"Overall, markets are expected to remain volatile as geopolitical developments, crude price movements, FII flows, and global macro data continue to drive sentiment," Khemka said.