Geopolitical Events, Corporate Earnings, Inflation Data Key Factors to Drive Markets: Analysts

Quarterly earnings of corporates, trading activity of foreign investors and inflation data are the key factors that are expected to drive the momentum in the equity markets this week, analysts said.

Moreover, markets would also focus on movement in crude oil prices amid geopolitical tensions, experts added.

"In the coming week, the market's direction will largely hinge on corporate earnings, with major companies like Reliance Industries, Infosys, HDFC Bank, Axis Bank, and HCL Technologies set to release their results, among others," Ajit Mishra, SVP, Research, Religare Broking Ltd, said.

From the macroeconomic front, investors will keep an eye on the CPI (consumer price index-based inflation) and WPI (wholesale price index-based) inflation data for September, scheduled to be announced on Monday.

Investors will also closely track updates on geopolitical tensions, particularly their impact on crude oil prices, and foreign fund flows. Key domestic economic data, including CPI and WPI inflation, are also scheduled for release, which could influence market sentiment, Mishra added.

Last week, the BSE benchmark fell 307.09 points, or 0.37 per cent to close at 81,381.36, while NSE Nifty slipped 50.35 points or 0.20 per cent to settle at 24,964.25.

The markets ended the week marginally lower, marking a pause after a sharp decline. The week started on a downbeat note due to continued selling pressure from foreign investors, but selective strength in heavyweight stocks helped limit the losses in the later sessions, he said.

Further, the markets will also witness the opening of three initial public offerings (IPOs), one in mainboard and two in the SME segment.

Hyundai Motor India's initial share sale is set to hit the markets on Tuesday and will conclude on Thursday, as the automaker plans to raise Rs 27,870 crore, through an offer for sale.

Lakshya Powertech and Freshara Agro Exports from the SME segment will also open their IPOs next week on October 16 and October 17, respectively.

"The Indian market is currently in a phase of consolidation due to premium valuations and a subdued outlook for Q2 results.

"Foreign Institutional Investors (FIIs) are capitalising on arbitrage opportunities in the Chinese markets, driven by stimulus measures and low valuations. The RBI policy was neutral, as the change in stance does not indicate the likelihood of a rate cut in the near term," Vinod Nair, Head of Research, Geojit Financial Services, said.

Foreign investors turned net sellers in October, withdrawing shares worth Rs 58,711 crore in the month so far owing to escalating conflict between Israel and Iran, a sharp rise in crude oil prices, and the strong performance of the Chinese market.

The recent increase in the US 10-year Treasury yield, driven by an unexpected rise in core inflation and ongoing geopolitical challenges, has prompted FIIs to shift towards more affordable markets. This trend is expected to affect equity asset performance in the short term, Nair said.

According to Siddharth Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, on the economic calendar front, India, China and UK will announce their inflation numbers.

European Central Bank (ECB) interest rate decisions, China GDP and US retail sales will also be key events to watch out for, Khemka said.