Dalal Street Week Ahead: Key Developments on US-Iran Relations, Trump-Xi Meeting, Inflation, Q4 Earnings and Other Market Drivers

Market Extends Upward Journey for Second Consecutive Week

The Indian market extended its upward journey for the second consecutive week, closing 7/10th of a percent higher amid volatility. The easing oil prices, hope of a US-Iran deal, recovery in rupee, favourable state election outcomes, and Q4 earnings supported the market despite lingering geopolitical tensions.

Market Expectations for Coming Week

In the coming week starting from May 11, the market is expected to be consolidative with range-bound trading until there is a deal between the US and Iran. The participants will closely monitor the geopolitical developments between the US and Iran, the Trump-Xi meeting, US and India inflation, March quarter earnings, and the movement in oil prices.

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Key Market Indices

The Nifty 50 rallied 179 points (0.74 percent) to 24,176, and the BSE Sensex gained 415 points (0.54 percent) to 77,328 during the week, while the broader markets continued to outperform the benchmark indices with the Nifty Midcap and Smallcap 100 indices soaring 3.56 percent, and 4 percent, respectively.

Economic Data and Corporate Earnings

Key economic releases like US inflation, PPI, retail sales, and home sales numbers along with weekly jobs data will be closely watched. The focus will also be on Fed officials' speeches given consumer sentiment at a record low and inflation expectations still elevated. Most economists expect US inflation for April to increase further from 3.3 percent in March, which was a sharp rise from 2.4 percent in February and January, due to Iran war-led spike in energy costs.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Q4FY26 earnings have remained encouraging so far, with earnings of 154 MOFSL universe companies growing 17 percent YoY. The focus will also be on further set of March quarter earnings, with nearly 500 companies releasing their numbers next week, including Nifty 50 names like Dr Reddy's Laboratories, Bharti Airtel, Cipla, JSW Steel, Tata Motors Passenger Vehicles, Power Grid Corporation of India, and Tata Steel.

Domestic Economic Data

Back home, the market participants will keep an eye on retail as well as WPI inflation data for April due on May 12 and 14, respectively. According to most economists, both inflation numbers are expected to increase further to over 3.5 percent and more than 4 percent from 3.4 percent and 3.88 percent in March, respectively.

Foreign Exchange and Corporate Actions

The movement in rupee will also be tracked by the market participants. The currency snapped two-week weakness and advanced 0.43 percent to finish at 94.47 against the US dollar after hitting an all-time low of 95.43 during the week. The ongoing US–Iran proposal talks are supporting stability in the markets but uncertainty around the final outcome continues to limit strong risk appetite.

The market participants will also keep an eye on the mood at the Foreign Institutional Investors' (FIIs) desk. They remained net sellers in the passing week to the tune of over Rs 11,000 crore, taking the total current calendar year's outflow to more than Rs 2.51 lakh crore. However, Domestic Institutional Investors (DIIs) made significant buying during the week, offsetting entire FII outflow.

IPO Action

The primary market has not seen a strong pick-up in the number of IPOs yet, may be due to consistent volatile and range-bound trading in the equity markets tracking geopolitical developments. Only two SME IPOs - Goldline Pharmaceutical, and RFBL Flexi Pack worth nearly Rs 47 crore - will hit Dalal Street next week with both opening for public subscription on May 12.

Technical View

Technically, the Nifty 50 remained within the 23,800–24,500 range for the second consecutive week. The index closed higher in both weeks and formed a small bullish candle with an upper shadow on the weekly charts, signalling pressure at higher levels. Until then, consolidation and range-bound trading may continue in the upcoming sessions.