Week ahead: Q1 earnings, US-Iran war, FIIs activity and IPO listings among key market triggers to watch

Indian equity markets ended the week on a positive note, supported by strong buying in information technology stocks and sustained domestic institutional inflows. The NIFTY50 gained 0.5%, to close at 24,334, while the Sensex advanced 0.7%, to settle at 78,151. The recovery came despite weak global cues, elevated crude oil prices, a sharp depreciation in the rupee and continued selling by foreign investors.

The rally, however, remained concentrated in largecap stocks. The Nifty Midcap 150 index declined 0.8%, while the Nifty Smallcap 250 slipped 0.6% during the week. Sectorally, the Nifty IT index emerged as the strongest sector, gaining 4.3% following better-than-expected earnings from major technology companies. Consumer Durables rose 3% and Private Bank advanced 1.5%. Capital Markets was the biggest laggard, falling nearly 3% , while Real-Estate and Metals declined around 2% each.

On the macro front, investor sentiment remained cautious as foreign investors remained net sellers. A weaker rupee, firm crude oil prices and uncertain global cues also kept volatility elevated.

For the coming week, consumer durable stocks may remain in focus as investors assess whether the recent demand recovery can translate into stronger quarterly earnings. For the week, Kalyan Jewellers, Bata India and Havells India advanced in the range of 1.4% to 5%.

Meanwhile, in India the primary market will also remain active, with five IPOs opening for subscription and four companies scheduled to list. Among listings, SBI Funds Management will remain the key focus after its ₹9,813-crore IPO received subscriptions of more than 40 times. Millworks Technologies, Alpine Texworld and Sotefin Bharat are the other scheduled listings.

In the United States, earnings will be dominated by technology and electric-vehicle companies like General Motors, followed by a Alphabet, Tesla, IBM and Intel.

With large companies reporting on both sides of the globe, stock-specific volatility could remain elevated. In the US, guidance from Alphabet, Tesla and Intel could influence sentiment across technology, artificial intelligence and semiconductor stocks.

Market breadth

Market breadth improved during the week, with 64% of NIFTY50 stocks trading above their 50-day moving average. The reading has moved steadily higher from below 50% in late June, indicating that participation is gradually broadening beyond a limited group of heavyweight stocks.

Foreign investors positioning

Foreign investors remained net sellers in July, offloading equities worth ₹4,546 crore in the cash market. In contrast, domestic institutional investors bought shares worth ₹21,074 crore, providing a strong cushion against foreign outflows. While foreign investors continue to remain cautious amid a weak rupee, the quantum of selling has reduced in comparison to the last four weeks.

NIFTY50 outlook

The NIFTY50 index continues to trade within a rising channel formed after the June recovery, while the sequence of higher lows keeps the near-term structure constructive.

However, the index is approaching an important resistance zone around 24,400–24,530. This area has capped recent advances and also coincides with the upper half of the rising channel. A sustained close above 24,530 would strengthen the breakout and open the way towards 24,700–24,800.

On the downside, the 20-day and 50-day EMAs create an immediate support band around 24,000–24,070. Below this, 23,818 remains the key positional support. A decisive break below 23,818 would weaken the higher-low structure and increase the possibility of a deeper correction.

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