How will Sensex, Nifty behave on Monday? 4 factors to drive D-Street action this week - The Economic Times

Indian equity benchmarks are likely to face a mixed start on Monday as investors weigh multiple domestic and global factors. The market will be driven by quarterly earnings from heavyweights, movement in crude oil prices, foreign institutional investor (FII) flows, and global cues such as the US Federal Reserve's policy stance. Analysts suggest that the coming week will be crucial for determining the short-term direction of the Sensex and the Nifty, with key support and resistance levels being closely watched.

One of the primary factors will be the ongoing earnings season. Several blue-chip companies are scheduled to announce their July-September quarter results, which will provide insights into corporate health. Strong earnings could bolster sentiment, while any disappointment may trigger profit booking. According to market experts, the IT sector, banking, and auto stocks will be in focus as their numbers often set the tone for the broader market. The Nifty is currently trading near its 50-day moving average, and a decisive close above the 19,500 mark could open the door for further upside, whereas a fall below 19,200 may lead to consolidation.

Global cues, especially the US dollar index and US Treasury yields, will also play a pivotal role. A stronger dollar tends to pressure emerging markets like India, while a softer dollar can attract foreign inflows. Additionally, the movement in crude oil prices remains a key monitorable, as India is a major importer. Any spike in oil prices could widen the current account deficit and stoke inflation, thereby impacting market sentiment. Analysts note that the Organization of the Petroleum Exporting Countries (OPEC) and its allies are set to meet, and any decision on output cuts could influence prices. In the previous week, Brent crude hovered around $85 per barrel, and a sustained rise above $90 may weigh on the indices.

Foreign institutional investor (FII) flows will be another important determinant. In the last few sessions, FIIs have been net sellers in the cash market, while domestic institutional investors (DIIs) have provided support. According to provisional data, FIIs sold equities worth over ₹3,000 crore in the past week, whereas DIIs bought nearly ₹2,500 crore. This tug-of-war between foreign and domestic participants is likely to continue, and any turnaround in FII sentiment could provide a strong boost to the market. Additionally, the rupee's movement against the dollar will be watched, as a weaker rupee can deter foreign investment.

"The market is at a critical juncture. The next few sessions will decide whether the Nifty can break out or consolidate further. Investors should keep a close eye on global signals and earnings."

Technical indicators suggest that the Nifty has immediate support at 19,300 and 19,200, while resistance is seen at 19,550 and 19,700. The Sensex, on the other hand, has support around 64,800 and resistance near 65,500. A breakout above these levels could lead to a sharp move, while a breakdown may trigger stop-losses. Options data indicates that the 19,500 call option has the highest open interest, followed by 19,600, while put writing is visible at 19,300 and 19,200, suggesting that the market is likely to remain range-bound in the short term.

Furthermore, the upcoming release of US inflation data and the Federal Reserve's commentary will be closely scrutinized. Any hawkish signals could strengthen the dollar and pressure global equities. Domestically, the release of India's industrial production (IIP) data and consumer price index (CPI) inflation figures will also be on the radar. Analysts expect CPI inflation to remain within the Reserve Bank of India's tolerance band, but any upside surprise could alter rate cut expectations. Overall, the week promises to be action-packed, and investors are advised to stay cautious and adopt a stock-specific approach.

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