Indian equity markets are expected to see positive momentum this week, supported by easing geopolitical concerns in West Asia. Further traction will depend on developments in the ongoing negotiations and the normalisation of supply conditions around the Strait of Hormuz, which remain key to shaping global risk sentiment and energy market stability.
Against this backdrop, macro indicators including India CPI & WPI, US PPI, US Initial Jobless Claims, UK GDP, and EU CPI will be closely tracked. The ongoing earnings season is expected to drive stock-specific action, with results from ICICI AMC, ICICI Prudential, ICICI Lombard, Wipro, HDFC Life, HDFC AMC, and Angel One to be announced in the next few days.
Last week, markets staged a powerful rebound, with gains broad-based across segments. The Nifty-50 surged 5.9%-its best weekly rally in five years-and reclaimed the 24,000 mark. Nifty Midcap 100 and Nifty Smallcap 100 advanced 7.8% and 7.6%, respectively, signalling a clear revival in risk appetite. The ceasefire-driven improvement in sentiment, alongside a correction in crude prices, provided a strong trigger for the broad-based rally. Sectoral performance was positive, led by Realty (+13%), Capital Markets (+11.7%), and Auto (+11.6%).
The correction in crude prices is particularly constructive for India, as it alleviates pressure on inflation, the current account, and the currency, while also supporting fiscal dynamics. Sustained moderation in energy prices could materially strengthen the domestic macro backdrop.
From a policy standpoint, the RBI maintained status quo on rates at 5.25% while retaining a neutral stance. The commentary reflected a relatively cautious undertone, with FY27 GDP growth projected at 6.9% and inflation at 4.6%, alongside upward revisions in crude and currency assumptions. Despite this, stable rates continue to support valuations, particularly across rate-sensitive sectors such as financials, autos, capital goods, and infrastructure.
At a sectoral level, the elevated crude prices continued to have a cascading impact on the oil & gas ecosystem. Oil marketing companies have moved to procure diesel, ATF, and kerosene at discounted refinery transfer prices (up to ~Rs 60/Rs 50 per litre), providing partial relief, although under-recoveries remain sensitive to crude movements.
Foreign institutional investor flows, which had been a persistent drag on markets amid risk off sentiment due to West Asia war, are now showing early signs of reversal. While FIIs remained net sellers to the tune of ~Rs 35,000 crore during the first four sessions of April-averaging nearly Rs 9,000 crore of daily outflows-the intensity of selling moderated meaningfully as the week progressed. Outflows declined to ~Rs 4,500 crore across Wednesday and Thursday (averaging ~Rs 2,200 crore per day). Importantly, flows turned marginally positive in the final session, with net buying of Rs 672 crore, marking the first inflow after a prolonged 27-session selling streak.
Notably, monthly SIP contributions increased 7.5% MoM to a Rs 32,087 crore in March, marking a ~7.5% MoM increase, underscoring sustained retail participation despite market volatility.
We expect a phased recovery in the near term, supported by stable macros, improving sentiment, and resilient domestic liquidity. However, sustainability will hinge on progress in US-Iran negotiations and easing of tensions around the Strait of Hormuz, with crude prices, the rupee, and FII flows remaining key near-term drivers. As the earnings season progresses, focus is likely to shift towards company performance and management commentary, driving more stock-specific movements.