NEW DELHI, May 24: Developments related to negotiations between the US and Iran to resolve the West Asia conflict, oil prices, and foreign investors’ trading activity will largely influence stock markets in a holiday-shortened week, analysts said.
Equity markets will remain closed on Thursday for Bakri Id.
The rupee-dollar trend and global market sentiment will also be tracked by investors, according to analysts.
“This week is expected to remain highly sensitive to global macroeconomic developments and currency movements. Investors will also monitor crude oil prices, developments in US-Iran negotiations, and the trajectory of the US dollar and bond yields, all of which are expected to influence foreign flows and overall risk appetite,” Ajit Mishra, SVP, Research, Religare Broking Ltd, said.
US Secretary of State Marco Rubio on Saturday said that some progress had been made in the negotiations between the US and Iran, signalling that the conflict in West Asia could be nearing a resolution.
The Reserve Bank on Friday announced a record dividend of Rs 2.87 lakh crore to the government for the year ended March 2026, providing a financial boost for the exchequer amid rising import bills and supply chain disruptions due to the West Asia conflict.
Participants will closely assess the impact of the RBI’s record dividend transfer on liquidity expectations, fiscal flexibility, and government spending prospects going forward, Mishra added.
“Markets are expected to remain volatile and heavily headline-driven in the coming week, with investor attention firmly focused on developments surrounding the US-Iran situation, broader diplomatic negotiations, and movements in crude oil prices.
“While hopes of a diplomatic breakthrough and easing geopolitical tensions have improved sentiment modestly, investors continue to remain cautious as uncertainty surrounding the final outcome of the negotiations remains elevated,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
In addition to geopolitical developments, investors are expected to closely monitor rupee movement, global equity market trends, institutional flow dynamics, and broader macroeconomic indicators for directional cues, he said.
“With global uncertainty still elevated, market participants are likely to remain selective and cautious despite the recent improvement in sentiment,” Ponmudi added.
Vinod Nair, Head of Research, Geojit Investments Limited, said a more constructive market setup would require crude oil prices to ease more meaningfully, FII flows to stabilise, and Q1FY27 earnings expectations to be managed without significant downgrades.
Last week, the BSE benchmark climbed 177.36 points, or 0.23 per cent, while the NSE Nifty rose 75.8 points, or 0.32 per cent.
Gold, silver likely to remain range-bound
Gold prices are likely to remain range-bound in the coming week as traders await more clarity on the evolving US-Iran negotiations, while silver is expected to retain a positive bias amid persistent geopolitical uncertainty and elevated energy rates, analysts said.
Apart from geopolitical developments, investors will also track US housing data, GDP numbers, consumer confidence readings, and Personal Consumption Expenditure (PCE) inflation data for further clues on the Federal Reserve’s policy outlook, they added.
“Gold price momentum next week looks sideways, while silver still looks positive as focus will again be on the peace negotiations between the US and Iran to end the war,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
Domestic futures markets will remain closed during the morning session on Thursday for Bakri Id.
Gold futures rose marginally to close the previous week at Rs 1.58 lakh per 10 grams, while silver edged lower to settle at Rs 2.71 lakh per kilogram on the Multi Commodity Exchange (MCX).
“Gold traded in a range-bound manner last week, posting marginal gains of around 0.40 per cent on the MCX to close near Rs 1,58,670 per 10 grams,” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said.
The week witnessed sharp profit booking in crude oil, with prices correcting nearly 7 per cent from higher levels, easing some inflation concerns globally, he added.
“At the same time, the rupee recovered from weaker levels of 97 against the US dollar to strengthen near 95.70, which limited upside momentum in domestic gold prices despite stable international bullion trends,” Trivedi said.
In international markets, Comex gold futures slipped 1 per cent to end the week at USD 4,523.2 per ounce, while silver fell nearly 2 per cent to close at USD 76.20 per ounce.
“Gold prices moved in a consolidative range over the past few sessions, but ended the week with a marginal loss. Prices were steady amid a lack of fresh direction in the market — be it on the economy front or the US-Iran war front,” Mer said.
The volatility in crude oil prices persisted due to contradictory and frequently changing statements from American and Iranian officials, he added.
Meanwhile, President Donald Trump claimed on Sunday that Washington and Tehran were nearing a broad agreement aimed at easing tensions in the Gulf region and reopening the Strait of Hormuz.
In a post on Truth Social, Trump said the agreement had been “largely negotiated” and that only the final details remained before a formal announcement.
However, Iranian media rejected Trump’s claim that the Strait of Hormuz would fully reopen under the proposed agreement, insisting that control over the strategic waterway would remain with Tehran.
Analysts said the conflicting narratives from both sides have kept investors cautious, with bullion prices likely to remain highly sensitive to headlines emerging from the region.
Separately, traders are also expected to closely monitor remarks from Federal Reserve officials after Kevin Warsh formally succeeded Jerome Powell as head of the US central bank on Friday, taking charge during a period marked by geopolitical conflict, volatile markets, and persistent inflation pressures. (PTI)
