Markets drifted lower during the week and lost over a per cent, primarily pressured by the lingering uncertainty surrounding global tariffs and a disappointing start to the earnings season.
As the Indian stock market enters a pivotal trading week in July 2025, investor sentiment remains cautious amid several domestic and global triggers. With the benchmark indices showing signs of volatility in recent sessions, analysts are closely watching a mix of earnings announcements, macroeconomic cues, and international developments. Here are the seven key factors that may shape market direction this week:
1. Q1 Corporate Earnings
The spotlight this week is on Q1 (April–June) earnings results for FY26. Early trends suggest mixed performances across sectors. IT companies have reported muted growth due to global demand slowdown and currency headwinds. However, FMCG and auto firms are expected to show relatively better results thanks to robust rural and festival-led demand.
Market participants will closely monitor earnings reports from index heavyweights such as Reliance Industries, HDFC Bank, Infosys, and ITC, which are scheduled to announce their results this week. The outlook they provide will be critical in determining near-term investor sentiment.
2. Foreign Institutional Investors (FIIs)
FIIs have remained net sellers in Indian equities throughout 2025, pulling out over ₹1 lakh crore year-to-date. In July alone, they have sold shares worth more than ₹500 crore. Their continuous withdrawal has been a major reason behind the volatility in large-cap stocks.
The Indian rupee’s relative weakness, global interest rate concerns, and geopolitical uncertainties have kept FIIs on the sidelines. Any reversal or slowdown in outflows will provide a positive trigger for the markets.
3. Domestic Institutional Investors (DIIs)
In contrast to FIIs, Domestic Institutional Investors (DIIs)—including mutual funds, insurance companies, and pension funds—have been buying consistently. Strong SIP inflows have supported DIIs, who have helped cushion market declines.
Their buying will be closely watched this week, especially as several large-cap stocks have corrected to more attractive valuations. DIIs’ behavior often sets the tone for broader market movement, especially in a volatile environment.
4. Macroeconomic Data
The release of India’s CPI inflation and IIP (Index of Industrial Production) figures will provide further direction to the markets. Any spike in inflation could increase concerns around monetary tightening, while strong IIP growth would signal industrial recovery.
Investors are particularly cautious due to global inflation worries, including rising crude oil prices. A higher-than-expected inflation print could fuel expectations of another RBI rate hike, impacting rate-sensitive sectors like banking, auto, and real estate.
5. Global Market Trends
International markets remain choppy amid trade war concerns, especially following former U.S. President Donald Trump’s announcement of 30% tariffs on imports from the EU and Mexico. This has raised the risk of retaliatory actions and disrupted global investor confidence.
Moreover, U.S. economic data, including inflation and jobless claims, could influence Fed policy expectations. Any hawkish signals from the Federal Reserve would likely cause ripples in emerging markets like India.
6. Technical Indicators
From a technical standpoint, Nifty has breached its 20-day moving average, reflecting short-term weakness. Analysts believe that if Nifty breaks below the 25,000 mark, a sharper correction may follow. However, strong support is seen near 24,800–24,900 levels.
Investors are advised to watch these levels closely. A rebound supported by strong earnings could signal a bullish reversal, while continued weakness may prompt more profit booking.
7. IPO Activity and Unlisted Market Trends
India is currently experiencing a robust IPO cycle, with several new-age tech firms like Groww, Mobikwik, and Tata Capital planning listings. Over $6.7 billion has already been raised this year, and investor enthusiasm remains strong despite secondary market volatility.
The performance of recent listings and investor response to upcoming IPOs could influence short-term market liquidity and sentiment, especially among retail investors.