Dalal Street Week Ahead: Key Events to Influence Market Sentiment

Market Sentiment Remains Cautious Amid Geopolitical Tensions and Elevated Oil Prices

The Indian market ended the week on a cautious note, erasing the gains made over the previous two weeks as investors remained wary of geopolitical tensions and their impact on crude oil prices, inflation, the rupee, and global economic growth. The benchmark indices, Nifty 50 and BSE Sensex, shed 2.2 percent and 2.7 percent, respectively, while the Nifty Midcap and Smallcap 100 indices corrected 2.17 percent and 4.6 percent, respectively.

Key Economic Indicators to Watch

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The market is expected to maintain a cautious tone in the week starting May 18, with investors focusing on economic releases, rupee movement, FOMC minutes, flash PMI readings, and stock-specific action driven by March quarter earnings. The Strait of Hormuz crisis and its impact on global economies, inflation, and currency movements will continue to be a major concern.

Domestic Factors to Watch

Despite supportive domestic factors such as resilient Q4 earnings, favourable valuations, and expectations of policy measures aimed at curbing imports, stabilising the rupee, and supporting capital flows, the market remained cautious. The Indian rupee fell to a fresh all-time intraday low of 96.14 against the US dollar before ending at a new closing low of 95.96 with 1.57 percent depreciation.

Corporate Earnings and Economic Data

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The March quarter earnings season will be in full swing, with nearly 700 companies set to release their quarterly earnings scorecard in the coming week. Economic releases like infrastructure output for April and HSBC Manufacturing & Services PMI flash for May will also be watched next week. Manufacturing PMI rose to 54.7 percent in April from 53.9 percent in the same period, while Services PMI jumped to 58.8 percent from 57.5 percent in the same period.

IPO Action and Technical View

The action is expected to be back in the primary market, especially in the SME segment, as there will be six SME initial public offerings (IPO) worth Rs 180 crore hitting Dalal Street next week. The technical view indicates that the Nifty 50 has broken the last three-week consolidation range on the downside and fallen below key moving averages. The index formed a bearish candle with a long lower shadow on the weekly timeframe, indicating weakness despite recovery from the day's low.

Conclusion

The market sentiment remains cautious amid geopolitical tensions and elevated oil prices. Investors will closely monitor economic releases, rupee movement, FOMC minutes, flash PMI readings, and stock-specific action driven by March quarter earnings. The domestic factors, including resilient Q4 earnings, favourable valuations, and expectations of policy measures, will continue to support the market, but the overall sentiment remains cautious.