New Delhi, March 29 Developments related to the ongoing month-long conflict in West Asia, its impact on crude oil prices, and global trends would continue to be key drivers for domestic equities in the week ahead, analysts said.
In addition, the rupee-dollar trend and trading activity of foreign investors would also play a crucial role in shaping investor sentiment.
Stock markets would remain closed on Tuesday and Friday for Shri Mahavir Jayanti and Good Friday, respectively.
"This week is expected to remain influenced by global macroeconomic developments, particularly crude oil price trends and progress in the US-Iran ceasefire negotiations, which will be critical in shaping market sentiment. Stability in the rupee will also be important for any revival in foreign institutional flows," said Ajit Mishra, SVP, Research, Religare Broking Ltd.
On the domestic front, key data releases include industrial production data for February and the HSBC Manufacturing PMI for March, which will provide insights into economic momentum and fiscal positioning, he said.
Foreign investors have pulled out Rs 1.14 lakh crore (about USD 12.3 billion) from domestic equities this month amid the escalating conflict in West Asia and a weakening rupee.
The West Asia conflict started on February 28. While the US and Israel attacked Iran, the Islamic Republic retaliated by targeting Washington's allies in its neighborhood and Tel Aviv.
"Looking ahead, markets are likely to remain volatile and driven by developments on the geopolitical front. Investors will be closely watching the situation in the Middle East, where any escalation or signs of easing could quickly shift sentiment, particularly through their impact on crude oil prices.
"Elevated oil prices are expected to keep pressure on markets, while any pullback could prompt short-covering and support a rebound," said Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm.
Foreign investor flows, moves in the rupee, and broader global market trends are also likely to play a key role in shaping the near-term outlook, he said.
In a week shortened due to holidays, the BSE benchmark Sensex lost 949.74 points or 1.27 per cent, and the NSE Nifty tanked 294.9 points or 1.27 per cent.
Hariprasad K, Research Analyst and Founder, Livelong Wealth, said, "The week ahead is expected to be largely dictated by global drivers, with crude oil, currency movements, and geopolitical developments remaining key variables."