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Stock Market Next Week Prediction: Last week was dominated by geopolitical tremors. The massacre of 26 tourists in Pahalgam on April 22, attributed to The Resistance Front (TRF)—an affiliate of Pakistan-based Lashkar-e-Taiba—triggered India’s Operation Sindoor on May 7. Precision airstrikes were carried out on terror launchpads in Pakistan and PoK, which was met with retaliation across the LoC by Pakistani forces.
India responded with an offensive targeting eight Pakistani military bases, raising concerns of full-scale conflict. However, global diplomacy prevailed as the United States facilitated a ceasefire, but later Pakistan violated the ceasefire just a few hours after the announcement.
So, is the dust settles, the million-dollar question is—how will the Indian stock markets react next?
Expert Outlook: “Cautious Optimism with Critical Technical Levels in Focus”
Sugandha Sachdeva, Founder of SS WealthStreet, suggests that although tensions have cooled off, uncertainty continues to shadow sentiment:
“The outlook for the next week remains cautiously optimistic, as there has been a de-escalation of tensions between India and Pakistan, yet the cloud of uncertainty looms large. We need to watch developments at the border closely,” she said.
She also highlighted global triggers likely to sway sentiment:
Russia-Ukraine ceasefire push
US-China tariff de-escalation
Robust foreign portfolio investor (FPI) flows
“If the benchmark index Nifty holds the crucial support at 23,850, buying interest could return. However, if breached, we may slip to 23,500. On the flip side, if Nifty sustains above the 24,400-24,450 zone, strong upside momentum could follow,” she explained.
Technical Signals & Derivatives: “Consolidation with Rising Nervousness”
According to Sudeep Shah, Deputy VP and Head of Technical & Derivatives Research at SBI Securities: “Despite geopolitical tensions, Nifty closed the week with just a 1% cut. However, Bank Nifty underperformed with a 2.76% drop. Interestingly, Nifty Midcap and Small Cap indices showed strength, recovering smartly on Friday.”
He warned about the continued rise in volatility: “India VIX jumped by nearly 19% — the highest weekly close since June 2024. This is a clear sign that market nervousness is far from over. Traders must adopt a cautious approach and implement strict risk management,” Shah said.
Nifty Levels to Track:
Support: 23,850–23,800, followed by 23,500 (100-day EMA).
Resistance: 24,250–24,300. Sustained move above this may trigger a short-covering rally up to 24,800.
Bank Nifty Snapshot:
Bank Nifty broke below its 20-day EMA for the first time since April 11.
Support: 53,300–53,400; below that, 52,600.
Resistance: 54,200; breakout may extend to 55,300.
“With falling RSI and sideways action, Bank Nifty is likely to see a consolidation with a negative bias in the short term,” Shah cautioned.
Chart Patterns & Momentum View: “Candle Patterns Signalling Weakness”
Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan, added another layer of caution. He noted that the index has formed a bearish pattern on the weekly chart:
“The Nifty has formed an Engulfing Bear candlestick pattern at the 61.8% Fibonacci retracement level (24,500) of the Sept-April decline. The daily momentum indicator has given a negative crossover — a classic sell signal,” Gedia said.
He expects further downside in the near term: “Minor pullbacks toward 24,100–24,150 should be considered selling opportunities. We expect Nifty to drift toward 23,500, which aligns with the 200-day exponential moving average,” he explained.
Gedia also flagged India VIX’s rise to 21.54, suggesting elevated near-term volatility.
Historical Context: What Past Conflicts Tell Us About Market Behaviour
As per Shah, an analysis of previous major Indo-Pak conflicts reveals interesting market behaviour:
| Incident | Nifty Move (Next 90 Days) | Notes |
| Kargil War (1999) | +36% | Market rallied during conflict |
| Balakot Airstrike (2019) | +10% | Strong post-event recovery |
| Uri Attack (2016) | -8% | Fall also triggered by demonetization |
While short-term volatility is common during conflict, the Indian market has generally bounced back once the uncertainty fades.
“The historical trend reinforces that the market regains momentum post-shock. Current broader trend still appears sideways to bullish,” Shah suggests.
Global Triggers: Ceasefire Talks & Trade De-escalation
Two key global narratives could prove critical in shaping next week’s moves:
Russia-Ukraine Ceasefire Hopes
Mounting Western pressure on both Russia and Ukraine could yield a ceasefire. If formal negotiations begin, global risk sentiment may turn positive, benefitting emerging markets like India.
‘Another Factor that could boost the sentiments is the fact that Russia and Ukraine are considering ending the war, amid the mounting pressure from US and Europe, to push through a ceasefire. While strong FPI inflows provide a supportive backdrop, uncertainties, particularly the geopolitical risks surrounding the Indo-Pak tensions, US-China trade negotiations, and the Russia-Ukraine conflict, continue to cast a shadow over market sentiment. Investors are advised to stay vigilant and monitor these developments closely, as they will play a crucial role in shaping market dynamics in the coming week,’ added Sachdeva.
US-China Trade Developments
Any rollback in tariffs amid ongoing talks could boost global supply chain confidence and foreign inflows.
FPI Flows: Bullish Momentum, But Fragile Confidence
Foreign institutional investors (FIIs) have been net buyers over the past 15 sessions, investing Rs 42,800 crore into Indian equities. Aiding this sentiment were:
Crude oil under $63/barrel
Rupee appreciation to 84/USD
However, there was a shift post-escalation: “Following Thursday night’s military action, FIIs turned net sellers on Friday, offloading equities worth ₹3,798.71 crore,” Shah noted.
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Sector Watch: Where the Money is Going
Inflow Leaders:
Financial Services: Rs 19,367 crore in late April; Rs 31,104 crore in March-April combined.
Telecom: Rs 16,235 crore in May; 5th straight month of inflows.
FMCG, Capital Goods: Steady buying on growth optimism.
Outflow Zones:
IT: Rs 1,385 crore outflow recently; over Rs 23,000 crore in the last two months.
Auto: Rs 42,765 crore out since August.
Metals: Weakness due to global trade friction.
Strategy for Investors: Focus on Quality and Sectors in Favour
‘We advise long-term investors to accumulate quality large-cap and mid-cap stocks at attractive prices in a staggered manner from a long-term perspective. We recommend traders to focus on Banking and Financial, Defence, Cement & Capital Goods Space, which we expect to show relative outperformance in the coming weeks,’ Shah said.
He also added that the stock-specific approach is the only way to navigate current volatility. Names like Titan, LT, and HDFC Bank could outperform.
Bottom Line
While geopolitical stress has eased, volatility remains elevated, and caution is warranted. With positive cues from FPI activity, technical resilience in broader indices, and favourable global developments on the horizon, Indian markets may enter a consolidation phase with selective buying.
