The Indian stock market has recently experienced a remarkable surge, marking its most significant weekly gain in four years. This rally comes as a result of a shift in foreign investors’ sentiment and optimism surrounding potential resolutions in trade negotiations between the United States and Japan regarding reciprocal tariffs. As we move into the fourth week of the new fiscal year (FY26), investors are poised to watch several market indicators that could influence future trends.

Market Performance and Key Indicators

During the previous session, domestic indices made impressive strides, with the Sensex and Nifty 50 climbing by two percent, reflecting a four-day rally in a week shortened by holidays. The 30-share BSE Sensex soared by 1,508.91 points, or 1.96 percent, reaching the 78,000 mark, ultimately closing at 78,553.20. Similarly, the NSE Nifty jumped by 414.45 points, or 1.77 percent, finishing at 23,851.65. Over the course of just four days, the BSE index surged 4,706.05 points, a staggering 6.37 percent, while the Nifty 50 rose 1,452.5 points, or 6.48 percent. However, both indices remain approximately nine percent below their record highs seen in late September.

Factors Driving the Rally

"This significant upswing in Indian equities has been fueled by a mix of attractive valuations following earlier corrections, a relief rally linked to the US tariff pause, and encouraging signals from the Reserve Bank of India’s monetary policy," explained Vishnu Kant Upadhyay, AVP – Research & Advisory at Master Capital Services.

While Indian stocks have regained their year-to-date losses, many of their Asian counterparts are still lagging due to ongoing uncertainties surrounding US tariffs and their potential impact on economic growth.

• Financial stocks on D-Street gained momentum after the central bank’s rate cut, leading to hopes for improved net interest margins.
• The upcoming expiry of April series contracts is expected to introduce increased volatility in derivatives.

Positive Economic Outlook

"India has emerged as the first significant market to fully rebound from the losses incurred following the recent US tariff announcements," noted Vinod Nair, Head of Research at Geojit Investments Ltd. He added that investor confidence is bolstered by expectations that the ongoing US-China trade tensions may inadvertently benefit India.

The domestic economic landscape remains supportive, prompting investors to consider increasing their exposure to riskier assets in the long term. Forecasts of an above-normal monsoon and a decrease in oil prices enhance the favorable inflation outlook.

Upcoming Market Triggers

Looking ahead, the coming week will be critical for the Indian stock market, with several key events and data releases to watch:

Earnings Reports

Investors will be keenly observing earnings reports from major companies, including Infosys, Yes Bank, HDFC Bank, and ICICI Bank. Other notable firms such as HCL Technologies, Axis Bank, Hindustan Unilever, and Maruti Suzuki India will also announce their quarterly results.

• Earnings Growth Expectations: Experts predict that growth for the fourth quarter could be lackluster due to subdued demand and margin pressures. "These results will play a crucial role in shaping market sentiment, as disappointing figures could dampen enthusiasm and reverse recent gains," cautioned Upadhyay.

Foreign Institutional Investor (FII) Activity

After a long period of selling, foreign portfolio investors (FPIs) have shifted gears, purchasing over $1 billion in Indian stocks during the last three trading sessions. After a selling spree in early April, the total FII sell figure reached ₹23,999 crore by April 19.

• Reversal Reasons: Two key factors contributed to this turnaround:
  • A decline in the US dollar index, encouraging FII to invest in emerging markets.
  • A projected 6 percent growth for India in FY26, despite global uncertainties, contrasting with expected subdued growth in the US and China.

"India’s relative growth prospects may lead to outperformance in the market," remarked Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Global Market Influences

Global uncertainties regarding tariffs continue to loom large. Former President Donald Trump has expressed a desire to reduce imports and boost domestic manufacturing, raising concerns about potential economic repercussions if tariffs are enforced. The US Federal Reserve, led by Jerome Powell, has acknowledged that the tariffs could exceed earlier estimates, potentially slowing down the economy.

Continued attention will be focused on global macroeconomic data, the US dollar, bond yields, and crude oil prices as they could significantly affect market dynamics.

Upcoming Corporate Actions

In the coming week, shares of several companies such as Muthoot Finance Ltd, Schaeffler India Ltd, and CIE Automotive India Ltd will trade ex-dividend.

Technical Analysis

From a technical standpoint, the Nifty 50 is eyeing potential gains in the 24,250–24,600 range, while the 23,000–23,300 zone is expected to provide support in the event of a dip.

As investors prepare for another week of trading, keeping an eye on these developments will be essential in navigating the evolving landscape of the Indian stock market.