Dalal Street investors prepare for turbulent week amid strife

MUMBAI: Dalal Street investors are looking at another volatile week, truncated by a holiday on Tuesday. The developments in West Asia during the weekend initially unnerved market players on Saturday and Sunday, but as the war between the US-Israel and Iran progressed, most are taking it in their stride. They expect sensex and Nifty to open the week lower and then stabilise. The subsequent movement would be as per news flows about the developments in West Asia, they said.

Market players also see crude oil prices to jump on Monday, mainly because of expected supply disruptions in one of the biggest oil-producing regions in the world. This in turn could put pressure on the rupee. They also expect prices of the two precious metals—gold and silver—to jump on safe haven demands.

For govt bonds, it could be a tricky path to negotiate: On the one hand, there would be haven buying that would push up prices. On the other hand, the expected rise in inflation, mainly due to oil price hike, could pull down prices, market players said.

According to V K Vijayakumar of Geojit Investments, the near-term impact of the war in West Asia would be negative. “Crude has spiked and if the crude price remains high for an extended period, (India’s) balance of trade and balance of payments will be impacted since we import around 85% of our oil requirements. OPEC+ will scale up production and try to stabilise prices. If the strait of Hormuz is closed (there are unconfirmed reports of this) the crude price can spike further. (The US president) Trump may forcefully reopen this. But that requires boots on the ground, which will escalate tensions further.”

Gold and silver prices are set to remain highly volatile with gap up opening on Monday and would continue as long as the conflict in West Asia dominates global risk sentiment, said Jateen Trivedi of LKP Securities.