Market Outlook for the week starting 25th May 2026

Indian Market

Indian equity benchmarks ended the week with marginal gains amid heightened volatility and sharp intraday swings. The S&P BSE Sensex rose 177.36 points or 0.23% to settle at 75,415.35, while the Nifty 50 gained 75.80 points or 0.32% to close at 23,719.30. Broader markets delivered mixed performance, with the BSE Mid-Cap index rising 1.09% to 16,374.34, while the Small-Cap index remained flat with a marginal decline of 0.03% to 6,682.86. Market sentiment remained range-bound due to persistent FII selling, sharp rupee depreciation near record lows, elevated crude oil prices, and concerns regarding possible RBI intervention in the currency market. However, gains in IT, pharma, and export-oriented stocks supported indices amid easing geopolitical tensions and hopes of improving global recovery momentum.

Global Market

Global markets ended the week on a positive note as easing US bond yields and optimism surrounding possible diplomatic progress between the US and Iran supported investor sentiment. The Dow Jones Industrial Average advanced 2.1% weekly to close at a record 50,579.70, while the S&P 500 gained 1.04% to settle at 7,473.47. The Nasdaq Composite rose 0.9% to end at 26,343.97. Treasury yields softened after recent spikes, easing pressure on global equities. Oil prices also cooled from recent highs amid renewed diplomatic efforts between the US and Iran, improving risk appetite across global markets. However, concerns around slowing global growth, sticky inflation, and hawkish central-bank commentary continued to keep investors cautious.

Key Reasons for Market Movement

·         Value buying in IT and large-cap stocks supported benchmark indices

·        Persistent rupee weakness and FII outflows kept sentiment cautious

·        Elevated crude oil prices and fuel hikes increased inflation concerns

·        Pharma and export-oriented stocks gained on dollar strength

·        Easing US bond yields and hopes of US–Iran diplomatic progress supported global sentiment.

US–Iran Warfare

Geopolitical tensions in West Asia continued to influence global financial markets, though optimism improved after reports of renewed diplomatic engagement between the United States and Iran. Investors remained hopeful that negotiations could reduce the risk of prolonged conflict and disruption in global oil supply routes. The easing in geopolitical tensions helped crude oil prices retreat from recent highs and supported global equity sentiment. However, markets continued to remain sensitive to developments surrounding the Strait of Hormuz and potential escalation risks, as any disruption in energy supply chains could significantly impact inflation, currencies, and global growth expectations.

Crude Oil

Crude oil prices remained elevated despite cooling from recent highs as investors tracked developments in the Middle East conflict. Brent crude settled near $103.54 per barrel, while WTI crude closed around $96.60 per barrel. In India, petrol and diesel prices were increased twice within a week due to fluctuations in global crude prices, intensifying inflation concerns and pressuring household consumption. Rising fuel costs continued to impact transportation, logistics, aviation, paints, and chemical sectors, while also contributing to rupee weakness and imported inflation concerns.

Economy

India’s macroeconomic indicators reflected steady but moderating growth momentum. The Index of Eight Core Industries grew 1.7% in April 2026, supported by higher cement, steel, and electricity output. Meanwhile, the HSBC Flash India Composite PMI remained strong at 58.1 in May, indicating continued expansion in private sector activity. However, manufacturing PMI slipped to 54.3, marking one of the weakest improvements in nearly four years due to high energy costs and Middle East-related trade disruptions. Globally, easing inflation in the UK and softer inflation in Japan supported hopes of policy stability, while US Federal Reserve officials continued to maintain a hawkish stance amid persistent inflation risks.

Outlook for Upcoming Week

Indian equities are expected to remain cautious in the upcoming week amid persistent macro uncertainty, currency volatility, and global inflation concerns. Technically, the Nifty continues to trade below its key moving averages, indicating a cautious undertone in the broader market. The 50-days and 200-days exponential moving averages (EMA) are expected to act as strong resistance zones and may continue to restrict any sharp upside recovery. Unless the index sustains above the 50-days EMA with stronger buying momentum, the market is likely to remain range-bound mode for near term. On the downside, immediate support is placed around the 23,100–23,400 zone, while resistance is expected in the 24,000–24,300 range. Investors will closely monitor India’s Industrial Production data, fiscal deficit figures, and forex reserve position for further cues on domestic economic health. Globally, focus will remain on US GDP data, Core PCE inflation numbers, Federal Reserve commentary, and US labor market indicators. Market participants will also track China’s industrial profits and foreign investment data for signs of global demand recovery. Crude oil prices, rupee movement, foreign fund flows, and geopolitical developments in West Asia are likely to remain key market drivers. Markets are likely to remain stock-specific with heightened volatility, and investors may prefer a selective and balanced approach focused on quality businesses and sectors with strong earnings visibility until broader macro stability improves.

Best Regards

Team Equisigma