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The Indian stock markets are expected to take their cues from a mix of corporate earnings, global economic indicators, and foreign fund activity this week, according to analysts. With no major geopolitical tensions on the horizon and the India-Pakistan conflict now behind, attention is shifting back to domestic economic fundamentals and global trade negotiations.

"Additionally, there is growing optimism around the possibility of an early India-US trade deal, which could provide further support to market sentiment," said Puneet Singhania, Director at Master Trust Group.

Positive commentary around a potential bilateral agreement between New Delhi and Washington has also surfaced, with US President Donald Trump reiterating that India is willing to eliminate 100 per cent tariffs on American products, reported PTI.

Earnings Season Takes Centre Stage

As the earnings season progresses, key companies such as Power Grid Corporation of India, Hindalco Industries, ONGC, Sun Pharmaceutical Industries, ITC, and JSW Steel are slated to release their quarterly results. The performance of these corporates will likely play a decisive role in shaping short-term market sentiment.

Ajit Mishra, SVP - Research at Religare Broking Ltd, noted that in the absence of any major domestic or international events, investors are expected to zero in on earnings reports and macroeconomic data for direction. “Updates on global trade deals and their impact on global markets will also be closely tracked,” he added.

Mishra further pointed out that the role of foreign institutional investors (FIIs) remains crucial in sustaining the ongoing market rally. “On the corporate earnings front, several prominent companies, including ONGC, ITC, Hindalco, JSW Steel and Power Grid are set to announce their quarterly results, which could influence near-term market trends,” he said.

Foreign Fund Flows Bolster Sentiment

Investor sentiment has also received a boost from the reversal in FII activity. After being net sellers during the first quarter of 2025, offloading Rs 1,16,574 crore worth of equities, FIIs turned net buyers in April. This momentum continued into May, with purchases totalling Rs 23,778 crore through May 16.

“The focus will also remain on the ongoing Q4 earnings season,” said Siddhartha Khemka, Head - Research, Wealth Management at Motilal Oswal Financial Services.

V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted the positive shift in the broader economic climate. “With the global trade scenario improving after the pause in trade war between the US and China and the end of the India-Pak conflict, the investment scenario has improved,” he stated.

The broader markets  reflected this optimism. In the previous week, the BSE benchmark surged 2,876.12 points or 3.61 per cent, while the Nifty gained 1,011.8 points or 4.21 per cent, signalling strong bullish sentiment backed by improving macro and earnings indicators.