Dalal Street Outlook: Markets eye recovery after two weeks of decline; Raw and geopolitical signals in focus

After two weeks of declines, Dalal Street could see some consolidation this week, with crude oil prices and developments in the US-Iran conflict likely to remain key drivers of market sentiment, analysts said.Brent crude oil prices, which are currently above $90 a barrel, will be closely watched, along with geopolitical developments, said Siddhartha Khemka, head of research and wealth management at Motilal Oswal Financial Services Ltd.“After two weeks of correction in the Nifty, Indian stock markets could consolidate, with a marginal recovery expected in the near term. Key monitorables include Brent crude oil prices, which are anchored above $90 a barrel, and geopolitical developments,” Khemka told PTI.The attention of the global market will also be focused on the political outlook of the United States Federal Reserve. Investors are expected to closely monitor the Jackson Hole symposium, particularly the Federal Reserve Chairman’s remarks, for indications on the direction of interest rates.“Investors will closely monitor the Jackson Hole symposium, particularly the US Federal Reserve Chairman’s comments, for indications on the future path of interest rates. US GDP estimates, durable goods orders and consumer confidence will also provide important clues on the strength of the US economy and the Federal Reserve’s policy outlook,” said Ajit Mishra, senior vice president of research at Religare Broking Ltd.US economic data, including GDP estimates, durable goods orders and consumer confidence, will offer more clues about the health of the economy and the Federal Reserve’s policy outlook.“Global markets head into next week with investors’ attention focused on three key themes: the Federal Reserve’s policy path, Nvidia’s quarterly results and the unresolved conflict between the United States and Iran,” said Ponmudi R, CEO of Enrich Money.Investors will also closely examine Federal Reserve Chairman Kevin Warsh’s Jackson Hole speech amid volatile long-term Treasury yields.“Against a backdrop of volatile long-term Treasury yields, Fed Chairman Kevin Warsh’s speech at the Jackson Hole symposium will be closely scrutinized for clues about how the central bank is weighing persistent inflation risks against signs of a weaker labor market ahead of its September policy meeting,” Ponmudi said.The conflict between the United States and Iran remains another major concern for global markets. The 60-day deal between the United States and Iran expired without a lasting agreement, while the Strait of Hormuz remains at the center of the confrontation.“The 60-day deal between the United States and Iran expired without a lasting agreement, leaving the Strait of Hormuz at the center of an unresolved confrontation and disrupting normal energy flows through the region,” Ponmudi added.Foreign institutional flows and liquidity conditions will be among the factors watched by investors, Mishra said. Meanwhile, foreign portfolio investors have accelerated their purchases of Indian stocks, bringing in Rs 23,544 crore so far in August.The increase in FPI buying comes after a weak week for domestic stocks. BSE Sensex ended last week lower by 468.42 points, or 0.60 per cent, while NSE Nifty fell by 114 points, or 0.46 per cent.