Mumbai: Fluctuations in the prices of crude oil along with the pace of the monsoon’s progress will drive the trajectory of the key equity indices next week, analysts opined.

According to market observers, investors will also follow the rupee’s movement against the US dollar and the direction of foreign fund flows for further cues.

“The markets next week will look forward to the outcome of the Opec [Organisation of the Petroleum Exporting Countries] meeting on oil supply. Oil prices have already moved lower in anticipation. This would help the INR [Indian rupee] and local bond yields,” Delta Global Partners Founder and Principal Partner Devendra Nevgi said.

“The trade war tensions have further aggravated between the US and China and US dollar appreciation can dampen the EM [emerging market] sentiment. India has also now been drawn into the trade war bandwagon with retaliatory tariffs on the US imports.”

According to Geojit Financial Services Head of Research Vinod Nair: “Global central banks are on a path to tighter monetary policy which has been outlined in US FED and ECB [European Central Bank] policy meets; this is expected to hurt emerging market inflows.”

“Further escalation of trade tensions is likely to impact near-term market sentiments. Defensive sectors like IT and pharma may remain attractive in the near term.”

Besides, the movement of Indian rupee against the US dollar and the direction of foreign fund flows will also set the course for the key indices.

“Indian rupee is unable to benefit from the decline in oil prices, hawkish US Fed continues to drive the dollar higher,” Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, said.

On the currency front, the rupee closed at 68.02 against the US dollar, weaker by 51 paise from its previous week’s close of 67.51 per greenback.

Domestic Institutional Investors

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold scrips worth Rs52.9 billion, while the domestic institutional investors (DIIs) purchased stocks worth Rs40.1 billion during the last week.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs30.7 billion, or $455.4 million, in the week ended June 15.

“In absence of local triggers the markets would stay rangebound, with downside floored by the DII support,” Nevgi said.

On technical-charts, the underlying intermediate trend of the National Stock Exchange’s (NSE) Nifty 50 remains bullish.

“Technically, with the Nifty recovering from the lows of 10,755 points, the intermediate trend remains up,” said HDFC Securities Retail Research Head Deepak Jasani.

“Further upsides are likely in the coming week once the immediate resistance of 10,834 points is taken out. Crucial supports to watch for any weakness are at 10,618 points.”

Last week, both the key Indian equity indices — S&P Bombay Stock Exchange (BSE) Sensex and the Nifty 50 — rose for the fourth consecutive week on the back of healthy industrial production data and an encouraging geopolitical scenario.

Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the BSE rose by 178.47 points or 0.50 per cent to close at 35,622.14 points on a weekly basis.

Similarly, the wider Nifty 50 of the NSE closed the week’s trade at 10,817.70 points — up 50.05 points or 0.46 per cent — from its previous close.