The Indian stock market snapped its three-week winning streak, its longest this year, after experiencing a sharp correction amid escalating geopolitical tensions between India and Pakistan, following a period of consolidation.

Next, investors will monitor some key market triggers in the coming week. The next set of March quarter earnings for fiscal 2024-25 (Q4FY25), domestic macroeconomic data, retail inflation, India-Pakistan geopolitical tensions, foreign capital inflows, and global cues will dictate the market trend in the week.

Indian stock market trends

Domestic equity benchmarks Sensex and Nifty 50 dropped 1.4 per cent last week, coming under pressure after the border conflict fueled stock market volatility and triggered a shift towards a risk-off sentiment.

The Nifty 50 fell 1.1 per cent on Friday but closed above the psychologically key 24,000-point mark, while the BSE Sensex also lost 1.1 per cent but ended below the 80,000 level. The volatility index, or the ‘fear gauge’, rose for an eighth straight session to hit a more-than-one-month high.

On the week, the Sensex declined by 1,047 points to settle at 79,454, while the Nifty 50 index slipped 338 points to close at 24,008—both registering a weekly loss of approximately 1.4 per cent. The Indian armed forces on Wednesday had carried out precise missile strikes on nine terror targets in Pakistan-occupied Kashmir (PoK) and Pakistan under ‘Operation Sindoor’.

“Initially, market sentiment was buoyed by optimism over the India-UK Free Trade Agreement and stronger-than-expected Q4 earnings from select index heavyweights. However, gains were later pared as escalating military tensions weighed heavily on the market mood,” said Puneet Singhania, Director at Master Trust Group.

“The consensus anticipates a potential softening in inflationary pressures. Geopolitical tensions between India and Pakistan remain a point of concern in the near term. Despite its unfolding nature and the unexpected escalation, the market expects the issue to wrap up shortly based on the economic and military strength of India,” said Vinod Nair, Head of Research, Geojit Investments Ltd.

This week, the primary market will witness more action, with some new initial public offerings (IPO) and listings slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical points of view. Investors will track domestic macroeconomic data, geopolitical events, along with corporate earnings.

Here are the key triggers for stock markets in the coming week:

Q4 Results, Macro data

On the macroeconomic front, investors will closely monitor the release of key data points, including the consumer price index (CPI), wholesale price index (WPI), and trade figures for exports and imports. The corporate earnings season will gather pace, with several major companies, such as PVR INOX, Tata Steel, Bharti Airtel, Cipla, GAIL, Hero MotoCorp, Tata Motors, Lupin, Godrej Industries, and BHEL, scheduled to announce their quarterly results.

IPO Action: 2 new issues, 2 listings

No new mainboard issues are scheduled to open for subscription so far this week. In the SME segment, two new issues will open for bidding. Among listings, two SMEs will get listed on either BSE SME or NSE SME.

FII Activity

On the flows front, foreign institutional investors (FIIs) maintained their buying streak, infusing nearly ₹5,087 crore into the cash segment, while the domestic institutional investors (DIIs) added nearly ₹10,450 crore.

FPI flows to date in May were positive for key emerging markets (except Indonesia). India, Brazil, Malaysia, Philippines, South Korea, Taiwan, Thailand, and Vietnam witnessed outflows of $1,371, $360 million, $148 million, $35 million, $361 million, $3,343 milion, $32 million, and $52 millio, respectively.

Global Cues, India-Pakistan geopolitical tensions

On the global front, market analysts noted that the latest US Federal Reserve policy meeting offered limited reassurance to investors. US Fed policymakers voiced concerns that heightened tariffs could exacerbate the inflationary pressures and potentially lead to higher unemployment.

Despite this cautious tone, the Indian and global market sentiment slightly improved last week following some encouraging signals from both the US and China regarding a potential resumption of trade negotiations.

“Optimism surrounding a prospective US–UK trade agreement helped sustain momentum across global markets. Meanwhile, a rate cut by the People’s Bank of China contributed to a broadly positive tone, reinforcing investor confidence across the region,” said Vinod Nair of Geojit.

The current geopolitical developments, particularly the tensions with Pakistan, will continue to dominate the week ahead. Investors will also keenly watch movements in crude oil prices and the US dollar index.

“Rising tensions between India and Pakistan are likely to dominate investor sentiment in the coming week, creating a cautious undertone in Indian equity markets. Any escalation along the border or strong diplomatic developments could lead to uncertainty,” said Puneet Singhania of Master Trust Group.

Technical View

Technically, Nifty 50 is currently hovering around key moving averages, suggesting the potential for further downside. A decisive break could extend the decline toward 23,200. Read full technical analysis here

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.