Indian stock markets are likely to take cues from September-quarter earnings, foreign institutional investor (FII) flows, global bond yields and crude oil prices in the coming week, as investors assess whether the recent recovery can sustain its momentum after a strong weekly rally.
The Nifty rose 2.77 per cent during the week, while the Sensex gained 3.11 per cent, supported by renewed buying in information technology (IT) stocks, easing pressure from global bond yields and sustained inflows from domestic institutional investors (DIIs).
Both benchmark indices extended their gains for a second consecutive session on Friday, strengthening hopes of a recovery following the recent market correction.
The Sensex advanced 413.66 points, or 0.56 per cent, to close at 74,729.27, while the Nifty 50 climbed 148.80 points, or 0.65 per cent, to settle at 23,146.15. For the week, the Sensex gained 2,256.94 points, while the Nifty added 625.7 points.
Market participants will now focus on the September-quarter earnings season to assess whether the recovery can broaden beyond IT stocks. Results and management commentary from banking, consumption and industrial companies will be closely monitored for signs of stronger revenue growth, improving margins and sustained demand.
Corporate guidance for the coming quarters will also be important in shaping investor expectations. Strong earnings and positive business outlooks could support market sentiment, while disappointing results or cautious commentary may limit further gains.
Foreign institutional investor flows will remain another key factor influencing market direction. Although overseas portfolio outflows have moderated, sustained selling by foreign investors could weigh on equities. Continued buying by domestic institutional investors, however, is expected to provide support to the market.
Global bond yields and expectations surrounding monetary policy will also remain in focus. Any renewed rise in yields could put pressure on equity valuations by making fixed-income investments relatively more attractive. Conversely, easing yield pressures may support risk appetite and encourage investors to increase their exposure to equities.
Crude oil prices and geopolitical developments will be additional factors to watch. A sustained rise in international oil prices could increase India’s import bill, add to inflationary pressures and complicate the outlook for corporate margins. Any escalation in geopolitical tensions could also trigger volatility in global financial markets.
