Week Ahead: US-Iran Tensions, Crude Oil Surge, FII Flows and Nifty's 200 EMA in Focus
Indian markets closed the week on a weak note, with the NIFTY50 declining over 1% to 25,178 — slipping below key moving averages amid broad-based selling. The negative close has set a cautious tone for the March derivatives series. In the week ahead, investors will closely track geopolitical developments in the Middle East, crude oil price movements, FII activity, and critical domestic and global economic data.
What Dragged Markets Last Week
Two major themes weighed on sentiment during the week. First, IT stocks came under significant pressure amid concerns over AI disruption and a global technology sector sell-off. The Nifty IT index fell over 4%, marking its worst monthly performance in years.
Second, geopolitical tensions escalated sharply towards the end of the week following military strikes involving Iran and Israel, stoking global risk aversion and raising concerns about energy supply disruptions. While markets received a brief boost earlier in the week after a US Supreme Court ruling on tariff measures lifted financial and PSU bank stocks, that recovery was quickly reversed by the return of broader selling pressure.
Crude Oil and the Energy Sector Spotlight
Rising geopolitical tensions have provided support to crude oil prices, which continue to trend above their 21-day and 50-day exponential moving averages (EMAs) — a broadly positive technical signal for the commodity. This has benefited the Nifty Oil & Gas Index and the broader energy sector.
Upstream producers such as ONGC and Oil India stand to gain directly from elevated crude prices, which improves their earnings outlook. However, a sustained break below crude oil's 50-day EMA on a closing basis could quickly reverse sentiment across energy stocks. The situation around the Strait of Hormuz — a critical global oil transit route — will be particularly important to monitor given the ongoing Middle East conflict.
Key Events to Watch This Week
- US Jobs Report (Friday): The Bureau of Labor Statistics will release non-farm payroll data, marking the first return to the normal release schedule since early September. This will be a critical data point for global risk sentiment.
- ISM Manufacturing PMI (Monday): A key barometer of US industrial activity, released by the Institute for Supply Management.
- ISM Services PMI (Wednesday): Will provide further insight into the health of the US economy.
- India GDP Data: India's growth outlook has been revised upward under the new GDP series (base year 2022–23). Real GDP for FY26 is now projected at 7.6%, up from an earlier estimate of around 7.4%. The economy expanded by a strong 7.8% in the October–December quarter, reflecting resilience in manufacturing and services.
- Market Holiday: Both NSE and BSE will remain closed on March 2 on account of Holi.
FII Activity: Selling Continues for Eighth Straight Month
Foreign Institutional Investors (FIIs) extended their selling streak for an eighth consecutive month, offloading shares worth Rs 6,640 crore in Indian equities during the week. Heavy selling on the final trading day erased earlier gains and reversed a brief recovery trend from the previous month.
In the derivatives segment, FIIs have opened the March series with a distinctly bearish positioning. The long-to-short ratio on index futures stands at 21:79, with net open interest heavily skewed towards short contracts — a signal that institutional investors remain cautious on the near-term market outlook.
Market Breadth: A Warning Sign
Market breadth deteriorated through the week, with the percentage of NIFTY50 stocks trading above their 50-day moving average sliding to the 35–40% zone by week's end. Readings below 40% are typically associated with market weakness, while a sustainable bullish structure generally requires this reading to be above 70%.
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