What to Expect in the Stock Market This Week Amid Global Tensions?

Market Outlook: Key Factors Influencing Trading

New Delhi: This week, the stock market is expected to respond to ongoing tensions in West Asia, which could affect crude oil prices and the trading patterns of foreign investors, according to analysts.

The trading week is likely to start cautiously, particularly after a notable drop in US markets over the weekend, as noted by experts.

Additionally, the progress of the monsoon season and the announcement of inflation data will be crucial elements to monitor.

Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, stated, "Key inflation and global macroeconomic data releases will drive market sentiment this week. Investors in India will be particularly focused on the inflation figures for May, set to be released on June 12, alongside foreign exchange reserves data on the same day."

Mishra further emphasized that global developments regarding US-Iran negotiations and their potential impact on crude oil prices, currency fluctuations, and overall market sentiment will be under scrutiny.

On Friday, US markets closed significantly lower, with the Nasdaq Composite dropping by 4.18%. The S&P 500 fell by 2.64%, and the Dow Jones Industrial Average decreased by 1.35%.

Santosh Meena, Head of Research at Swastika Investmart Ltd, mentioned, "The upcoming week is likely to commence with caution due to the sharp declines in global markets, especially in AI-related technology stocks. However, domestic markets may benefit from resilient GDP growth, a stronger rupee following the RBI's policy announcement, and a notable decrease in crude oil prices."

Meena also pointed out that the situation regarding US-Iran relations remains volatile, contributing to fluctuations in global markets.

This week is expected to be data-intensive, with several significant macroeconomic reports from both the US and China. The US inflation data scheduled for Wednesday is particularly critical, as it could greatly influence expectations regarding the Federal Reserve's future policy direction and set the tone for global markets.

Last week, the BSE benchmark Sensex fell by 532.4 points, or 0.71%, while the NSE Nifty dropped by 181.05 points, or 0.76%.

Hariprasad K, Research Analyst and Founder of Livelong Wealth, noted, "The Nasdaq's 4% decline marked its worst single-day drop since April 2025, as investors reduced their exposure to semiconductor and technology stocks. Given the significant influence of IT on Indian indices, this weakness may affect domestic markets and keep sentiment subdued in the early part of the week."

Globally, the US CPI inflation data will be a key event to watch, with Hariprasad adding that a lower-than-expected reading could rekindle hopes for future Federal Reserve rate cuts and enhance risk appetite across global markets.