Week ahead: RBI policy, Q1 earnings, crude oil prices and FIIs activity among key market triggers to watch

Indian markets made a strong recovery during the week following their steepest weekly decline in several months. The NIFTY50 rose by around 2.6% to close at 24,383, and the SENSEX advanced by a similar amount to settle at 78,094. Both indices recovered the previous week’s losses, ending in the green for three consecutive sessions. The broader markets also joined the rally, with the NIFTY Midcap 150 and Smallcap 250 indices advancing by 2% and 1.8%, respectively.

Markets started the week on a positive note after the U.S. temporarily suspended air strikes against Iran, triggering a sharp correction in crude oil. Sentiment improved further as the rupee strengthened, foreign investors returned to the cash market and quarterly earnings supported stock-specific buying. However, the U.S. Federal Reserve’s continuous pause in policy rate and renewed volatility in crude oil restricted the upside.

The recovery broadened during the second half of the week. IT stocks led the initial rebound, with global investors reducing their exposure to AI-focused companies. The index rose by over 6%, encountering resistance around the 200-day EMA. Automobiles and financials subsequently joined the rally, rising by over 5% and 2%, respectively. The defence and energy sectors were the laggards, losing 0.2% each.

As per the management commentary of companies, the outlook remains supported by healthy demand, new model launches, higher EV adoption and expectations of a stronger festive season. However, rising commodity costs and elevated crude-oil prices remain key risks to margins.

The main US economic release next week will be the jobs report from the Bureau of Labor Statistics on Friday. The data will show whether the labour market remains stable after appearing weak for much of 2025. Other important releases include the job-openings report on Tuesday.

Although the focus will shift from mega-cap technology companies to semiconductors, healthcare, industrials and consumer businesses, the US earnings calendar will remain busy. Key companies set to report earnings include Palantir, AMD, McDonald’s and Eli Lilly. The next major test for the AI investment narrative will be provided by AMD and Palantir.

However, the de-escalation proved fragile. Fresh Iranian attacks on US-linked facilities and commercial vessels prompted President Donald Trump to threaten stronger military action if Tehran did not return to negotiations.

Market breadth

Market breadth improved during the week, with 62% of NIFTY50 stocks trading above their 50-day moving average, up sharply from 44% in the previous week. The reading has moved back above the neutral 50% mark, indicating broader participation in the market recovery. A sustained reading above 60% would strengthen the bullish setup, while a fall below 50% would suggest that participation is weakening again.

Foreign investors positioning

Foreign institutional investors remained net sellers in July, offloading equities worth ₹5,778 crore. However, the trend improved in comparison with the last four months. The return of foreign buying in pockets, along with a stronger rupee and lower crude-oil prices, supported the market recovery.

Meanwhile, domestic institutional investors continued to provide support, investing ₹35,099 crore during July. Sustained buying from both foreign and domestic institutions could strengthen the recovery, while renewed FII selling may restrict the upside.

NIFTY50 outlook

The NIFTY50 index recovered above the 20-day EMA and the 50-day EMA, indicating an improving short-term structure. Additionally, the positive DMI remains above negative DMI, supporting a positive bias. However, the ADX at 10.73 shows that the trend is still weak and requires confirmation.

The index now faces immediate resistance at 24,600 zone. A decisive close above this level could strengthen the recovery and open the way towards 24,750–25,000. On the downside, 24,150 will act as immediate support, followed by the moving-average zone around 24,000–24,100. If NIFTY50 slips below 24,000, the recovery could weaken.

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