Markets witnesed a sharp sell‑off last week, with benchmark indices ending firmly in the red as weak global cues and elevated uncertainty weighed on sentiment. Selling pressure intensified towards the close, dragging the Sensex down 2.55% to 83,576.24 and the Nifty lower by 2.45% to 25,683.30—one of the steepest weekly drops in recent months. Broader markets lagged the frontline indices, reflecting a distinct risk‑off trend.Global developments dominated the market mood. Fresh concerns over sharply higher US tariffs on Indian exports and lingering uncertainty around India–US trade relations triggered risk aversion. Geopolitical tensions involving the US and Venezuela further dampened confidence, while sustained selling by foreign institutional investors kept FIIs net sellers in equities throughout the week.

Here are the factors that could shape market direction in the upcoming week:

1. Q3 earnings: The coming week marks the start of the earnings season, with giants like TCS, Infosys, Wipro, Reliance Industries, HDFC Bank and ICICI Bank, among others, reporting their results for the third quarter of FY26.

2. Macroeconomic calendar: The Street is set to witness a busy macroeconomic calendar. Investors will closely track India’s CPI inflation, WPI inflation, trade balance, and foreign exchange reserves data for cues on inflation trends and external stability.

3. Trump tariffs: Globally, markets will keenly watch developments around the US Supreme Court verdict on the legality of Trump-era tariffs, which could act as a key sentiment driver.

4. Geopolitical developments: Ongoing geopolitical developments will also remain on investors’ radar.5. FII activity: On Friday, foreign institutional investors (FIIs) recorded net sales of Rs 3,609 crore in the Indian equities, while domestic institutional investors (DIIs) were net buyers at Rs 5,341.01 crore.

6. Currency movements: Rupee weakened, pressured by weakness in domestic equity markets and continued FII selling. Volatility in the dollar index, driven by key U.S. economic data, has further weighed on the currency. Elevated commodity prices are also adding to the import bill, keeping the rupee under pressure.

7. Technical factors: The Nifty closed lower for the fifth consecutive session and remained under sustained selling pressure. This marked a full-week decline across all five trading days, with a total drop of 2.45%, highest weekly fall since the week ending 26-Sept 2025.

“Nifty now trades below its 20-day and 50-day EMAs, signaling a shift to a positional downtrend. A decisive break below the 100-day EMA, placed at 25619, could accelerate selling toward the next major support at 25,318 (November 2025 swing low). Any recovery attempts will likely to face stiff resistance in the 25,950–26,000 zone,” said Nandish Shah – Deputy Vice President, HDFC Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)