US-Iran Tensions, Oil Prices, US Jobs, PMI Numbers Among Key Market Drivers Next Week

Market Correction Deepens Amid Global Risks

The Indian market corrected sharply in the week ended February 27, plummeting 1.54% as the Nifty 50 closed at 25,179 and the BSE Sensex slipped 1.84% to 81,287. The market's moderate gains in the previous week were erased due to renewed tariff uncertainty, concerns over AI-led disruption, and caution ahead of US–Iran tensions.

Key Factors Contributing to Market Volatility

1. Risk-off Sentiment: The market's initial support from the US Supreme Court's ruling against Trump's reciprocal tariff policy faded as the week progressed, contributing to a risk-off sentiment.
2. US-Iran Tensions: The situation in Iran turned more serious as the United States and Israel jointly launched a massive attack on Iran, heightening fears of supply disruptions, a spike in oil prices, rising inflation, and pressure on earnings and growth.
3. AI-led Disruption: Ongoing AI-related uncertainty continues to support safe-haven flows, contributing to market volatility.
4. Global Macro Factors: Domestically, a risk-off tone prevails as the earnings season tapers and global macro factors take precedence.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Sectoral Performance

1. Automobiles: Auto stocks are expected to react to the February numbers announced on March 1.
2. Energy-Intensive Industries: Energy-intensive industries, including aviation, logistics, paints, and chemicals, are likely to experience margin compression due to rising input costs.
3. Oil and Gas: Upstream oil producers could benefit from higher crude prices.

Economic Data to Watch

1. US Jobs Numbers: The market will be closely monitoring US jobs numbers, which may impact global growth.
2. China's Two Sessions Meetings: The market will be watching China's Two Sessions meetings, manufacturing and services PMI data, and currency movements.
3. US-Iran War: The ongoing war between the United States and Iran will be a key factor to focus on, with concerns about oil and gas supply, prices, and inflation.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Market Outlook

The market is expected to see a gap-down opening on Monday, with selling pressure widening only if there are major oil and gas supply concerns. Until then, there could be consolidation with range-bound trading after the initial reaction in the early part of the week.