Week ahead: Fed rate decision, Q1 earnings, US-Iran war and crude oil price volatility among key market triggers to watch

Indian equity markets recorded their sharpest weekly decline in several months as escalating Middle East tensions, rising crude-oil prices and weakness in Rupee weighed on sentiment. The NIFTY50 declined 2.3% to close at 23,767, while the Sensex fell 2.7% to 76,060. Both indices ended lower in all five trading sessions during the week.

The broader market also remained under pressure. The Nifty Smallcap 250 declined 2.3% to 17,601, while the Nifty Midcap 150 fell 1.2% to 22,685. Meanwhile, sectorally, selling was broad-based, with all major sectoral indices closing in the red.

The Nifty Private Bank index was the biggest laggard, declining 4.3% amid weakness in heavyweight lenders. Real-Estate fell 4.%, followed by Capital Markets, Oil & Gas and IT. Defensive pockets showed relative strength, with FMCG gaining 0.6% and Auto rising 0.4%.

Technically, the index has slipped below its 20-week EMA at 27,379 and is testing an important support area around 27,000–27,200. This zone coincides with the rising trendline and the 50-week EMA near 27,222. Momentum remains weak, with the directional indicators nearly balanced and the ADX at 15.94. If the support zone holds, the index could recover towards 27,800–28,000. A weekly close below 27,000 could weaken the structure further and extend the decline towards 26,000.

On the domestic front, investors will also track monsoon progress, the rupee and crude-oil prices. These factors have become important for India’s inflation and growth outlook as the country imports nearly 80% of its crude requirements.

Meanwhile, in the U.S, Microsoft, Meta Platforms, Apple and Amazon and ExxonMobil will report the earnings next week. Earnings and commentary of Microsoft, Meta, Apple and Amazon will remain the major market triggers.

Prices rose after the collapse of the preliminary U.S.-Iran peace agreement and renewed attacks, increased disruption to shipments through the Strait-of-Hormuz. As highlighted before, for India sustained crude prices near $100 could increase inflation concerns and add pressure on the rupee.

Market breadth

Market breadth weakened during the week, with the share of NIFTY50 stocks trading above their 50-day moving average falling to 44% from around 64% earlier in the week. This indicates that the selling pressure was broad-based and not limited to a few index heavyweights. However, the reading has now slipped below the neutral 50% mark, suggesting weakening short-term participation.

Foreign investors positioning

Foreign institutional investors remained net sellers in July, offloading equities worth ₹11,728 crore as rising crude-oil prices and a weaker rupee weighed on sentiment. This extends the cautious positioning seen in recent months and contributed to the pressure on benchmark indices.

Domestic institutional investors continued to absorb the foreign selling, purchasing equities worth ₹29,711 crore during the month. DII inflows were more than 2.5 times the FII outflows, providing an important cushion against a sharper market decline.

NIFTY50 outlook

The NIFTY50 slipped below the rising channel and the important 23,818 support. The index is also trading below both its 20-day and 50-day EMA, keeping the short-term structure weak. From a trend perspective, the negative DMI remains above the positive, although the low ADX reading suggests that trend strength remains limited.

If the index sustains below 23,818, the 23,550–23,600 zone will act as the immediate support. A decisive breakdown below 23,550 could extend the weakness towards 23,250. On the upside, a close above the 23,980–24,050 zone will signal a meaningful recovery.

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