Stock market in upcoming week: Global cues, foreign fund trends to drive momentum

Indian equities, over the upcoming week, are expected to be driven by a combination of domestic macroeconomic data, global cues, and foreign investor activity in the coming week, analysts said.Equity benchmarks ended the previous week on a muted note, weighed down by ongoing global uncertainties. The BSE Sensex fell 609.51 points or 0.74%, while the NSE Nifty declined 166.65 points or 0.66%.Ajit Mishra, senior vice president of research at Religare Broking Ltd said that subdued performance was driven by a combination of global and domestic factors. “On the global front, rising US bond yields and concerns over the United States’ mounting debt burden triggered foreign portfolio outflows, putting pressure on emerging markets, including India,” Mishra told PTI.In the upcoming week, investors will be closely tracking the release of key macroeconomic data. India’s industrial and manufacturing output data for April, due on May 28, and the first quarter GDP figures will offer critical insights into the pace of economic recovery. Additionally, updates on monsoon progress will be keenly followed, given their impact on inflation and rural demand.Globally, the market will stay alert to developments in the US bond market, the minutes from the Federal Reserve’s latest policy meeting, and progress in India-US trade negotiations—all of which could sway investor sentiment.“Moreover, the scheduled monthly expiry of May derivatives contracts and the final leg of the Q4 earnings season with results from key companies like Bajaj Auto, Aurobindo Pharma and IRCTC will remain in focus,” Mishra added.Another key trigger is expected to be the Reserve Bank of India’s (RBI) record dividend payout of Rs 2.7 lakh crore to the government for FY25—27.4% higher than last year. Analysts believe this could offer significant fiscal support at a time when the government is navigating higher defence spending and external tariff challenges.“Markets are expected to remain firm, with participation likely from the broader market segments as macro and earnings tailwinds continue to provide support. Investors will also be closely watching key data releases this week, including quarterly GDP figures for both India and the US,” said Siddhartha Khemka, head of research at Motilal Oswal Financial Services.The RBI dividend transfer will be among the first developments that investors respond to on Monday, with possible implications for bond yields and fiscal policy expectations.“Given the continued uncertainty surrounding the US economy, foreign investment flows, and trade negotiations, Indian markets may see a phase of consolidation in the near term,” noted Gaurav Garg, Analyst at Lemonn Markets Desk.Vinod Nair, head of research at Geojit Financial Services, added that while strong domestic macroeconomic indicators and optimism around the RBI dividend are encouraging, persistent FII outflows remain a concern. “Investor attention is further revolving around US-India trade talks and strong domestic macroeconomic indicators. However, recent FII outflows, driven by rising US bond yields amid concerns over mounting US debt, may weigh on the market sentiment,” he said.Nair added that hopes for fiscal consolidation have been lifted by optimism revolving around RBI’s potentially record-high dividend.