Mumbai: Geo-political risks, coupled with the ongoing quarterly results season and macro-economic data points, are expected to influence the trajectory of key Indian equity indices next week, analysts opined.
According to market observers, even the upcoming state assembly election in Karnataka, along with crude oil price fluctuations as well as the direction of foreign fund flows and the rupee's movement against the US dollar will impact investors' risk-taking appetite.
"Two important events will drive the market sentiments during the next two weeks. First, is the outcome of the US-Iran nuclear deal and the other is the Karnataka elections, especially BJP's performance," Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.
"The (expected) breakdown of the US-Iran deal and the ensuing sanctions on Iran would lead to a rise in crude oil prices and in geo-political risks. And a poor performance by BJP in Karnataka would raise the political risk premium on India."
Besides these, the ongoing results season will play an important role in determining the equity indices' movement.
Companies like ICICI Bank, Pfizer, Tata Chemicals, ABB India, Sun Pharma Advanced Research, Eicher Motors, Jindal Steel & Power, Oriental Bank of Commerce, Adani Transmission, Apollo Tyres, Asian Paints and SpiceJet are expected to announce their Q4 earning results next week.
"Result season will gather pace in the coming weeks with major heavyweights set to unveil their results; as per recent history, results during the second phase are dull," said Vinod Nair, Head of Research at Geojit Financial Services.
Apart from Q4 results, investors will look out for upcoming macro-economic data points such as the country's fiscal deficit numbers and industrial production figures which will be released during the week starting May 7.
In addition, Nair said that outflow of "foreign funds due to rich valuation is a concern to the market".
In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold scrips worth Rs 2,688.05 crore, while the domestic institutional investors (DIIs) purchased stocks worth Rs 932.99 crore during the week.
Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 1,351.85 crore, or $202.56 million, during May 2-4.
The fluctiuations in the Indian currency will also be watched, observers said. The rupee had weakened by 20 paise to close at 66.87 against the US dollar from its previous week's close at 66.67 to a greenback.
On the technical levels, the underlying short-term trend of the National Stock Exchange's (NSE) Nifty50 remains upbeat.
"Technically, despite the weakness seen this week, the Nifty remains in an uptrend," said Deepak Jasani, Head of Retail Research for HDFC Securities.
"Crucial support to watch for any trend reversal is at 10,514 points. The uptrend could resume if the resistance of 10,721 points is taken out."
Last week, both the key equity indices snapped their five weeks of rise on the back of geo-political tensions and a few lower-than-expected quarterly earning results.
Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) fell by 54.32 points or 0.16 per cent to close at 34,915.38 points.
Similarly, the wider Nifty50 of the NSE closed in the red. It trade at 10,618.25 points -- down 74.05 points or 0.69 per cent from its previous week's close.