Will Sensex, Nifty continue to rally on Monday? Q1 earnings among 6 factors to drive Dalal Street this week

The Indian stock market ended last week on a positive note, with Sensex and Nifty overall rising nearly 0.9% as a sharp rally in the last three sessions erased all losses recorded in the first two days of the week.

Sensex gained around 262 points to close at 77,764 on Friday, while Nifty 50 rose more than 95 points to end the session above 24,270 during Friday's trading session. The sharp gains added nearly Rs 44,155 crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 480 lakh crore.

Here are six key factors that could shape market sentiment in the week ahead between July 6 (Monday) to July 10 (Friday).


1) Q1 earnings season begins
Tata Consultancy Services (TCS), India's largest IT services company, is all set to announce its results for the April-June quarter of FY27 on July 9, officially kickstarting the Q1 earnings season for the IT pack and heavyweight largecaps.

According to Vinod Nair, Head of Research at Geojit Investments, the domestic earnings season will be one of the key factors shaping market direction in the upcoming week.

2) Will Iran-US peace efforts hold?
“No news is good news” is what can summarise the market scenario. The peace efforts in the Middle East are holding well so far, and no escalation has been reported yet. This comes after Iran and the US held peace talks in Doha earlier last week.

Iran is now holding a days-long funeral for the late Supreme Leader Ayatollah Ali Khamenei, whose death early in March had sparked the raging war. US President Donald Trump meanwhile has claimed that Iran has conceded to nearly all American conditions in the ongoing diplomatic negotiations while emphasising that the primary objective of the discussions remains preventing Tehran from obtaining nuclear weapons.

3) Will oil prices fall further?
Oil prices inched up slightly to $72 per barrel on Friday, but continue to hover near the pre-war levels as the peace efforts continue to hold well so far. Kuwait's oil production rose sharply to 1.65 million barrels per day in June from 580,000 ⁠bpd in May, Reuters reported citing sources on Thursday, as the OPEC member boosted exports following the US-Iran interim peace agreement.

Also, at least five supertankers carrying around 10 million barrels of Saudi oil have exited the Strait of Hormuz, with Saudi Aramco switching to spot pricing to speed sales in Asia, Reuters further reported. Falling oil prices will likely continue to provide much-needed relief to the market.

4) Will IT stocks rally more?
One of the key positive trends in last week’s market recovery was a stellar run by the IT stocks. After tumbling around 6% in the first three sessions of the week, Nifty IT erased all losses and soared 6.5%.

“The Nifty IT index rebounded nearly 2%, extending its two-day gain to over 6% on value buying following the recent correction and improving global technology sentiment,” said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services.

5) Rupee to strengthen or weaken?
Rupee rose 13 paise to close at 95.22 against the US dollar on Friday. This came on the back of a weaker US dollar after the tepid jobs report. “Improved global sentiment and a softer dollar helped the domestic currency recover from recent weakness. However, traders remain cautious ahead of the weekend as developments in the US-Iran and Russia-Ukraine conflicts could influence global risk appetite when markets reopen. Attention will also shift to the Federal Reserve meeting minutes next week, which may provide further clarity on the US interest rate outlook and direction for the dollar. Technically, the rupee is expected to trade in the 95.00–95.45 range, with global developments and foreign fund flows remaining the key drivers,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.

6) FII behaviour
Foreign investors remained net sellers of Indian equities, net selling shares worth nearly Rs 312 crore on Thursday, according to provisional data on NSE. This is marginal when compared to the massive FII outflows seen earlier this year during the raging war in the Middle East.

What lies ahead?
With several overhangs easing during the week, Indian equities shifted from defensive caution at the start to growing optimism by the close, Vinod Nair, Head of Research at Geojit Investments, highlighted. “Early in the week, scepticism over the durability of the US-Iran peace arrangement, muted expectations ahead of the upcoming earnings season, and a patchy start to the monsoon prompted profit-booking near key psychological levels. However, sentiment improved steadily as the week progressed. Easing tensions around the Strait of Hormuz weighed on crude oil prices, while dovish commentary from the Fed Chair, coupled with softer US labour market data, reinforced expectations of a more accommodative global interest-rate environment,” he added.

“Looking ahead, market direction will be shaped by the start of the domestic earnings season, monsoon progress, credit growth trends, and ongoing trade negotiations with Japan, the UK, and the US. While risks persist amid downward revisions to earnings growth estimates, monsoon-related inflation concerns, and continued FII caution, much of the visible uncertainty appears to be priced in, leaving room for a constructive read on incremental positives. The broader bias remains buy-on-dips, with a preference for large caps given their relative earnings resilience and attractive valuations,” according to the analyst.

Indian equities are expected to maintain a gradual uptrend, supported by favourable global cues and easing concerns over the US interest rate outlook, Khemka from Motilal Oswal said. “The ongoing June-quarter business updates are likely to drive stock-specific action, while investors will closely monitor the southwest monsoon after June rainfall remained 40% below the Long Period Average. While the IMD forecast July rainfall at 94% of the Long Period Average, it revised its 2026 monsoon forecast to 90% of the Long Period Average due to El Niño conditions,” the analyst said.

“Sectoral focus is expected to remain on Defence and Refining. Defence stocks are likely to remain in focus ahead of the Defence Acquisition Council meeting, where procurement proposals worth over Rs 1 lakh crore are expected to be considered. Refining companies may also attract attention following reports of higher refined fuel exports, highlighting India's growing role in global energy supply chains,” according to Khemka.

Technical view on Nifty
Nifty has registered a consolidation breakout on the daily chart, indicating improving market sentiment, said Rupak De, Senior Technical Analyst at LKP Securities. “Additionally, the index continues to sustain above the crucial 50-day EMA, reinforcing the positive short-term trend. The RSI has also witnessed a bullish crossover, adding further strength to the momentum. Going forward, Nifty appears well-positioned to advance towards 24,500 and potentially higher. On the downside, immediate support is placed at 24,200, followed by the stronger support zone around 24,000,” he added.

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