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Renewed hostilities near the Strait of Hormuz sparked a choppy retreat in domestic equities, even as favourable state-election outcomes provided a brief cushion to markets this week. Benchmark indices fell about 0.6% on Friday amid a global risk-off mood, as Iran accused the US of breaching their ceasefire agreement, citing attacks on its oil tankers and air strikes on coastal areas.
But markets ultimately eked out marginal weekly gains, though the underlying sentiment remained fragile and directionless. The Nifty 50 rose 0.74% to close at 24,176.15 and the Sensex ended 0.54% higher at 77,328.19.
Experts warn that persistent geopolitical uncertainty, coupled with volatility in the rupee and crude oil prices, will continue to weigh on investor sentiment, tethering markets to their current range. Currently Brent crude trades at $100.26 per barrel, while the rupee is pegged at 94.39 against the US dollar.
“The tug-of-war seen this week where positive state election outcomes were neutralized by geopolitical noise could continue,” said Gurmeet Singh Chawla, managing director at brokerage Master Portfolio Services. “Until there is either a credible ceasefire or crude prices correct meaningfully, the index is unlikely to make a decisive directional move.”
However, Chawla notes that even if the West Asia war subsides, a breakout rally is unlikely in the near term, as a sustained revival in foreign portfolio investor (FPI) inflows remains elusive. “For FPI flows to meaningfully reverse, India needs to have a stable currency and a visible valuation gap versus peers,” Chawla said.
FPIs have withdrawn nearly ₹2 trillion from domestic markets over the first four months of 2026, in favour of burgeoning artificial intelligence (AI) opportunities in the US and East-Asian markets. The rupee’s steady depreciation has eroded 6–8% of dollar returns over the past year, accelerating outflows.
As a result, India continued to lag its global peers this week, with South Korea’s KRX 100 and Kospi leading global gains with 13-16% returns. Vietnam, Taiwan and Japan followed, delivering 12%, 7% and 5% returns, respectively.
In fact, the Nifty 50 currently stands corrected 8% from its September 2024 peak, while several global markets have surged 30–150% in the same period, noted Motilal Oswal Financial Services. While some indices have already reclaimed record levels after the recent March sell-off, Nifty remains about 5% below pre-war levels, the brokerage noted.
At this juncture, experts say corporate earnings will drive future returns, a trend reflected in this week’s top sectoral performers, with automobiles, realty and healthcare each gaining 4–5%.
“The outperformance in realty and auto this week was squarely earnings driven,” Chawla said. Select real estate players reported strong pre-sales and collections, reinforcing the durability of the residential upcycle. Meanwhile auto companies posted healthy volumes and margin performance, signalling stability in demand after Goods and Services Tax (GST) rationalization, he added.
On the other hand, oil and gas and energy stocks were among the week’s top laggards, as profit booking set in after a strong run. Easing crude prices and emerging ceasefire signals have sapped the momentum from their rallies, experts said.
Analysts noted that going forward the ongoing flow of March quarter results will remain the primary market driver, with management commentary on demand outlook and margin guidance guiding sentiment. Meanwhile India’s April consumer price inflation print due next week will be closely tracked for signs of pass through from recent oil volatility.
Abhinaba writes deep-dive analytical stories on financial markets, corporate India and the economy. After finishing his post-graduation in finance from King’s College London, he moved into journalism three years ago with a goal to “simplify finance for all”. From tracking macroeconomic shifts and dissecting company fundamentals to decoding market sentiment, he connects the dots through data-driven storytelling, helping readers see the bigger picture.<br><br>Abhinaba writes across sectors and asset classes, analysing IPOs, decoding moves in precious metals and crude oil, and unpacking trends across public and private markets. Collaborating across beats, he aims to be Mint’s “jack of all trades”. More recently, he has also experimented with new storytelling formats, including crisp video explainers for Mint’s YouTube channel.<br><br>Across formats and topics, his goal remains the same: telling nuanced, insight-rich stories for his readers. When not writing, Abhinaba unwinds by cycling through the streets of Bandra in Mumbai, in search of fresh air and clearer thoughts. On quieter days, he turns to yoga, his preferred antidote to volatile markets, proving that while markets rarely find balance, at least the body occasionally can.
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