The Indian stock market finished last week with healthy gains after recovering from a weak start. Strong buying during the last three trading sessions helped erase earlier losses.
The Sensex rose about 262 points to close at 77,764 on Friday, while the Nifty 50 gained more than 95 points to finish above 24,270. The rally also increased the total market value of companies listed on the BSE by around Rs 44,155 crore, taking the overall market capitalisation to nearly Rs 480 lakh crore.
Here are the major factors that investors will watch in the coming week.
Q1 earnings season begins
The first quarter earnings season will begin with the results of Tata Consultancy Services (TCS) on 9 July. As India’s largest IT services company, its performance is expected to set the tone for the IT sector and other large-cap stocks.
Market experts believe corporate earnings will play an important role in deciding the market’s direction over the next few weeks.
Middle East developments remain important
Investors will continue to track developments in the Middle East. So far, peace efforts between Iran and the United States have helped calm global markets, with no fresh escalation reported.
Any improvement or setback in diplomatic talks could influence investor confidence and affect global financial markets.
Crude oil prices under focus
Crude oil prices remained close to pre-conflict levels, trading around 72 US dollars per barrel.
Higher oil production from Kuwait and increased exports from Saudi Arabia have improved global supply. If oil prices continue to remain stable or fall further, it would benefit India by reducing import costs and easing inflationary pressures.
Can IT stocks continue their rally?
IT shares staged a remarkable comeback last week. After falling sharply during the first half of the week, the Nifty IT index recovered strongly and ended with impressive gains.
Improving global technology sentiment and value buying after the recent correction supported the recovery. Investors will watch whether this momentum continues as companies begin announcing quarterly results.
Direction of the rupee
The Indian rupee strengthened by 13 paise to close at 95.22 against the US dollar on Friday.
A weaker US dollar and improving global sentiment supported the domestic currency. However, future movement will depend on developments in global conflicts, foreign investment flows and signals from the US Federal Reserve regarding interest rates.
Foreign investor activity
Foreign Institutional Investors (FIIs) remained net sellers during the week, although the selling was relatively limited compared with the heavy outflows seen earlier this year.
Their investment pattern will remain an important indicator for market sentiment in the coming days.
What could drive the market?
Analysts believe market sentiment improved steadily as concerns over geopolitical tensions eased and expectations grew that US interest rates may become more supportive for global markets.
In the coming weeks, investors will closely monitor:
- Corporate earnings
- Progress of the southwest monsoon
- Bank credit growth
- Trade negotiations involving India, Japan, the UK and the US
Although risks remain due to slower earnings growth, weather-related inflation concerns and cautious foreign investors, many analysts believe much of the uncertainty has already been factored into stock prices. They continue to favour buying quality large-cap stocks during market declines.
Sectors to watch
Defence stocks are expected to remain in focus ahead of the Defence Acquisition Council meeting, where major procurement proposals are likely to be discussed.
Refining companies may also attract investor attention following reports of stronger exports of refined petroleum products, reflecting India’s growing role in global energy markets.
Technical outlook for Nifty
Technical indicators suggest that Nifty has broken out of its recent consolidation phase, signalling improving momentum.
The index is trading above its important 50-day moving average, while technical indicators continue to show strength. Analysts believe Nifty could move towards the 24,500 level if the positive trend continues.
On the downside, immediate support is seen around 24,200, with stronger support near 24,000.
