The Indian stock market experienced a sharp correction, ending its three-week winning streak amid escalating geopolitical tensions between India and Pakistan. This downturn followed a period of consolidation, prompting investors to closely monitor upcoming market triggers. Key factors influencing market trends in the coming week include the next set of March quarter earnings for fiscal 2024-25 (Q4FY25), domestic macroeconomic data such as retail inflation, ongoing India-Pakistan geopolitical tensions, foreign capital inflows, and global cues.

Domestic equity benchmarks, Sensex and Nifty 50, both dropped by 1.4 per cent last week. The border conflict fueled stock market volatility, leading to a risk-off sentiment. On Friday, the Nifty 50 fell 1.1 per cent but managed to close above the 24,000-point mark, while the BSE Sensex also lost 1.1 per cent, ending below the 80,000 level. The volatility index, a measure of market fear, rose for the eighth consecutive session, reaching a more-than-one-month high. Overall, the Sensex declined by 1,047 points to settle at 79,454, and the Nifty 50 index slipped 338 points to close at 24,008, each registering a weekly loss of approximately 1.4 per cent.

Recent geopolitical events, such as the Indian armed forces carrying out precise missile strikes on nine terror targets in Pakistan-occupied Kashmir (PoK) and Pakistan under 'Operation Sindoor', initially buoyed market sentiment due to optimism surrounding the India-UK Free Trade Agreement and strong Q4 earnings from select index heavyweights. However, these gains were later offset by escalating military tensions, which weighed heavily on market sentiment. The consensus anticipates a potential softening in inflationary pressures, but geopolitical tensions between India and Pakistan remain a concern in the near term. Despite the unexpected escalation, the market expects the issue to be resolved shortly, based on India's economic and military strength.

The primary market is set to witness increased activity with several new initial public offerings (IPO) and listings slated across the mainboard and small and medium enterprises (SME) segments. Investors are advised to track domestic macroeconomic data, geopolitical events, and corporate earnings. Key macroeconomic data points to watch include the consumer price index (CPI), wholesale price index (WPI), and trade figures for exports and imports. The corporate earnings season will intensify, with major companies like PVR INOX, Tata Steel, Bharti Airtel, Cipla, GAIL, Hero MotoCorp, Tata Motors, Lupin, Godrej Industries, and BHEL scheduled to announce their quarterly results.

In the IPO arena, no new mainboard issues are scheduled to open for subscription this week, but two new issues will open for bidding in the SME segment. Additionally, two SMEs will be listed on either BSE SME or NSE SME. Foreign institutional investors (FIIs) maintained their buying streak, infusing nearly ₹5,087 crore into the cash segment, while domestic institutional investors (DIIs) added nearly ₹10,450 crore. FPI flows to date in May were positive for key emerging markets (except Indonesia). India, Brazil, Malaysia, Philippines, South Korea, Taiwan, Thailand, and Vietnam witnessed outflows of $1,371, $360 million, $148 million, $35 million, $361 million, $3,343 milion, $32 million, and $52 millio, respectively.

Globally, the latest US Federal Reserve policy meeting offered limited reassurance to investors, with policymakers voicing concerns that heightened tariffs could exacerbate inflationary pressures and potentially lead to higher unemployment. However, market sentiment slightly improved following encouraging signals from the US and China regarding potential resumption of trade negotiations. Optimism surrounding a prospective US–UK trade agreement helped sustain momentum across global markets, and a rate cut by the People’s Bank of China contributed to a broadly positive tone. The tensions with Pakistan will likely dominate the week ahead, with investors closely monitoring crude oil prices and the US dollar index. Rising tensions are expected to create a cautious undertone in Indian equity markets, with any escalation or strong diplomatic developments leading to uncertainty.

From a technical standpoint, the Nifty 50 is currently hovering around key moving averages, indicating the potential for further downside. Immediate support is placed at 23,800, and a decisive break below this level could extend the decline toward 23,200. On the upside, any rebound is expected to encounter strong resistance in the 24,400–24,600 range. Investors are encouraged to adopt a stock-specific approach and avoid aggressive positioning until greater clarity emerges, employing a hedged strategy to mitigate near-term risks.

Upcoming macroeconomic data releases include CPI on May 12, WPI on May 14, and trade figures for exports and imports on May 15. Globally, the U.S. CPI data will be released on May 13, and weekly initial jobless claim figures are set to be out on May 15. The Nifty index managed to limit its losses despite geopolitical tensions but continues to trade comfortably above its medium and long-term moving averages, indicating the broader trend remains intact. The zone of 23,850-23,800 will act as crucial support for the Nifty50 index, with 23,560-23,500 serving as the next crucial support if the index slips below 23,800. Conversely, the zone of 24,250-24,300 will act as a crucial hurdle on the upside. Investor focus will remain on the ongoing Q4 earnings season and key macroeconomic indicators for insights into the global economic outlook.