Major global cues — crude oil price fluctuations, tensions in the Middle East and a likely US interest rate hike — are expected to influence the movement of key Indian equity indices in the upcoming week.

According to market observers, the flow movement of foreign funds will also play a critical role in giving direction to equity markets’ trajectory.

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“For the week ahead, with Q2 results out of the way, global cues will be the key driver for the markets, with underlining trend expected to be positive,” predicted Vinod Nair, Head of Research at Geojit Financial Services.

“However, investors will closely monitor the crude prices and US Fed rate hike (decision) which are expected to bring some volatility.

Devendra Nevgi, Founder of Delta Global Partners said: “Markets next week would keep a close watch on local bond yields (especially for the banking sector) given the RBI actions on liquidity and supply dynamics.”

“Markets would look to support again from domestic investors given the fact that non-IPO buying from FPI remains subdued. Global risks need to be closely monitored especially crude prices.”

Last week’s provisional figures from the stock exchanges showed that foreign institutional investors purchased stocks worth Rs 2,791.2 crore, while the domestic institutional investors bought scrips worth Rs 2,913.41 crore.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) invested in equities worth Rs 4,637.75 crore, or $708.59 million, during November 13-17.

Nevgi cautioned that any sharp INR (rupee) movement would “hit the market prices of the relevant sectors such as IT”.

On the currency front, the rupee is expected to strengthen further. It had strengthened by 15 paise to close at 65.01-02 against the US dollar from its last week’s close at 65.16-17.

“With US dollar on backfoot against major currencies on the back of falling US yields, we can see rupee to strengthen against USD towards 64.80-85 levels on spot. A range of 64.80 to 65.10 can unfold on spot,” Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

On a technical basis, Nifty is expected to be in the “intermediate uptrend” zone with its next resistance level seen at 10,344 points.

“Technically, with the Nifty rebounding sharply from the lows of 10,094 points, the intermediate uptrend remains intact despite the correction seen in the last two weeks,” said Deepak Jasani, Head of Retail Research for HDFC Securities.

“Further upsides are likely early next week once the immediate resistance of 10,344 points is taken out sustainably. Crucial supports to watch in the near term are at 10,232 points.”

The key Indian equity indices — the BSE Sensex and the NSE Nifty — closed last week on a flat note as weak domestic macro-data, along with geopolitical tensions in the Middle East marred sentiments.

However, some gains were made last Friday after US credit rating agency Moody’s gave a sovereign ratings upgrade to the Indian government’s bonds.

Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) closed on a flat note — higher by just 28.24 points, or 0.08 per cent, at 33,342.80 points.

On the other hand, the broader Nifty50 of the National Stock Exchange (NSE) slipped by 38.15 points, or 0.37 per cent, to close at 10,283.60 points.