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

The Indian stock market overall recorded losses during the last week, with Sensex and Nifty extending a multi-session losing streak before recovering some gains later during the end of the week. Analysts now highlight that the market’s direction during the upcoming week will be determined by crude oil trajectory among other factors.

Sensex gained over 3 points to close at around 77,541 on Friday while Nifty 50 rose 20 points to end the session at 24,252. Overall, Sensex dropped over 0.6% and Nifty lost around 0.5% during the week.

Here are the 4 key factors that will likely determine market movement during the upcoming week between August 24 (Monday) and August 28 (Friday).


Iran-US tensions

The United States and Iran exchanged defiant messages ahead of scheduled announcement of new US economic sanctions on Monday that could impact Iran’s most important trading partners including China. US Treasury Secretary Scott Bessent will hold a press conference on ‌Monday amid promises to ⁠reveal "the toughest ⁠sanctions in history" on Iran while also urging China to cooperate with Washington. China buys more than 80% of Iran's oil, according to 2025 data from analytics firm Kpler. Beijing meanwhile has urged diplomacy.

Iran's Foreign Ministry spokesperson Esmaeil Baghaei on Saturday said that the US' possible announcement of new economic sanctions on Iran was an "assertion of extraterritorial sovereignty over every independent member state of the United Nations." "Such secondary sanctions find no foundation in international law," he said in a post on X.

Escalating tensions in the Middle East continued to spook investors, after a sharp selloff earlier this year following the outbreak of hostilities in the oil rich region back in late February.

Oil prices

Oil prices will remain one of the key factors to watch this week. Brent crude futures ended near $95 per barrel, while WTI Crude futures gained above $87 per barrel in the previous session. This comes as rising tensions in the Middle East spooked investors about the prolonged closure of the Strait of Hormuz, a critical waterway for oil shipments.

Notably, after soaring close to $130 per barrel earlier this year, crude prices had cooled down near $80 per barrel levels as an interim peace agreement between the two sides eased worries. However, the last escalations made the deal obsolete, retriggering spikes in oil prices.

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Bond yields

Yield on the 10-year benchmark bond rose to a two-month high of 6.88% on Friday before retreating to 6.85% at the close of the session, as sentiment turned cautious amid anticipation of a policy rate hike at home and escalation of the West Asia conflict. The yield jumped nearly 10 basis points during the week, making it the highest weekly rise this fiscal.

The yield on benchmark US 10-year notes rose to 4.736% while the 30-year bond yield rose to 5.276%. The yield on 2-year notes, which typically moves in step with Fed interest rate move expectations, increased to 4.24%. Increasing bond yields typically make bonds more attractive to investors, which in turn can lead to some downtrend in markets.

Key US data

Federal Reserve Chairman Kevin Warsh’s speech will be another key event for investors as they continue to seek clarity on whether and when US interest rates might rise. US PCE inflation data will also be watched closely, as this is the American central bank’s favored measure of inflation.

What lies ahead for Dalal Street?

Indian equities ended last week on a softer note, with investor decisions shaped largely by the twin overhang of rising energy costs and firm global yields, said Vinod Nair, Head of Research at Geojit Investments. He noted that the sentiment stayed defensive through much of the week as crude oil pushed past the psychologically important ninety-dollar mark, reviving imported-inflation worries. This backdrop triggered a sharp mid-week dip ahead of US FOMC minutes.

“Markets, however, clawed back losses towards the close, drawing support from value buying in financials and the underlying resilience of domestic fundamentals. Gold stood out as a strong performer, buoyed by safe-haven demand and its appeal as an inflation hedge,” the analyst noted.

Sectorally, investors rotated into realty, metals and private banks, drawn by firm commodity prices, healthy credit growth and reasonable valuations after the recent correction, while stepping away from IT and FMCG amid concerns over global technology spending and rising input costs, Nair said, adding that small-caps bucked the broader weakness, supported by stronger earnings visibility and their largely domestic-facing character, even as the frontline benchmarks drifted lower. “Looking ahead, upcoming US inflation & GDP prints will be key monitorable for the global rate trajectory,” he said.

Technical view on Nifty

Nifty remained range-bound during the day, with the index confined between the 20 EMA and 50 EMA on the hourly chart, said Rupak De, Senior Technical Analyst at LKP Securities. He added that on the daily chart as well, the index remained within the bands of the 20 EMA and 50 EMA.

“The RSI remains in a bearish crossover. Overall, sentiment remains sideways to mildly positive. On the lower end, support is placed at 24,200. A fall below 24,200 might trigger a correction towards 24,000. On the higher end, resistance is placed at 24,350; a rise above this level might take the index towards 24,500,” he explained.

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(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)