Markets On Edge: Fed Decision, Israel-Iran War, And Oil Prices To Drive Investor Sentiment
Stock market participants are expected to navigate another challenging week as multiple global and domestic factors converge to create an uncertain trading environment.
The escalating Israel-Iran conflict, coupled with fluctuations in Brent crude prices and critical interest rate decisions from major central banks, are set to dominate investor focus, analysts said.
Adding to the list of key triggers are tariff developments, inflation data, and monetary policy updates from central banks in the US, UK, and Japan, reported PTI.. Market observers suggest that these cues, especially amid heightened geopolitical risks, will influence investor sentiment and drive volatility.
Oil Price On The Rise
The domestic equity markets mirrored global nervousness last week, ending in the red. Benchmark indices Sensex and Nifty dropped nearly 1 per cent on Friday alone, with the BSE Sensex falling 1,070.39 points or 1.30 per cent and the Nifty slipping 284.45 points or 1.13 per cent. Rising crude oil prices, spurred by fears of supply disruption in the Middle East, were a major factor behind the sell-off.
“Indian stock markets are likely to follow the global trend, following rising tension in the Middle East amid the Israel-Iran conflict, which could fuel further pessimism and prompt investors to flee riskier assets. Also, traders will exercise caution ahead of the US Federal Reserve interest rate decision on Wednesday, coupled with other central banks of Japan and the UK announcing their interest rates separately,” said Ketan Vikam, Head of Sales at Almondz Institutional Equities.
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US Fed's Rate Decision In Focus
Looking ahead, the spotlight will be on the US Federal Reserve’s upcoming policy decision. Investors are likely to examine the Fed's guidance and economic projections for hints on when interest rate cuts might begin. “All eyes are now on the upcoming US Fed meeting... The Fed's commentary and economic projections will be closely scrutinised for future policy cues,” said Vinod Nair, Head of Research, Geojit Financial Services.
Back home, market sentiment will also be influenced by the trajectory of the monsoon, wholesale price inflation figures, and foreign institutional investor (FII) activity. “Markets are likely to remain volatile amid ongoing geopolitical uncertainty and crucial central bank meetings,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.
Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, echoed a cautious stance. “Overall, we expect the market to remain subdued on the back of weak global cues, while industry-specific news flows would continue to drive sectoral movements,” he said.
As the second half of June unfolds, markets may remain range-bound with heightened sensitivity to both global headlines and domestic developments.
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