Domestic equity markets snapped a two-week winning streak this week to end on a negative note. The BSE Sensex and NSE Nifty tumbled 2.70% and 2.20%, respectively. On Friday, the 30-pack index closed at 75,237.99, and the 50-pack index settled at 23,643.50. Both declined about 0.2% in the last session to end in the red.

However, early indicators hint at a slightly positive opening bias for Monday, May 18, as Nifty futures on the NSE International Exchange were up 61 points, or 0.26%, to trade at 23,769. 

 Volatility, geopolitics, and inflation concerns

Ajit Mishra, SVP of Research at Religare Broking Ltd, noted that escalating tensions in West Asia and uncertainty surrounding the US–Iran conflict kept energy markets highly volatile, pushing Brent crude above the $105-per-barrel mark.

“Rising energy prices triggered concerns over inflation, widening trade deficits, and margin pressures across energy-sensitive sectors,” Mishra added.

"Investor focus has now shifted toward rising inflation risks, driven by higher‑than‑expected WPI prints, ongoing fuel price pass‑through, and elevated bond yields," said Vinod Nair, Head of Research at Geojit Investments Ltd.  

Meanwhile, foreign institutional investors (FIIs) remained net sellers for most of the week, with outflows of over Rs 13,500 crore, however, domestic institutional investors (DIIs) acted as a strong stabiliser, recording net inflows of around Rs 18,500 crore that absorbed selling pressure. 

Key factors ahead

Ponmudi R, CEO of Enrich Money, said that investor sentiment would continue to hinge on diplomatic negotiations, the US–Iran conflict, and global energy market movements. Nair added that “any constructive progress toward reopening the Strait of Hormuz will be critical in restoring risk appetite and providing a more durable direction to the markets". 

On the domestic front, Mishra advised investors to closely track the infrastructure output data for April 2026, scheduled for release on May 20, which would provide insights into industrial activity. 

Key levels to watch

Nifty: According to Mishra, the 50-pack index witnessed a breakdown from its 23,800–24,500 consolidation range, indicating a weakening market structure. He noted that the 23,800–24,000 zone would now serve as an immediate resistance, while 23,150 remains a critical support level, followed by 22,900. 

Ponmudi shared a similar outlook, placing near-term support at the 23,500–23,400 zone. He highlighted that a break below this range could expose the index to the 23,200–23,000 zone.  

Sensex: Looking at the 30-pack index, Ponmudi observed the Sensex trading near the 75,200–75,300 zone. He placed immediate resistance in the 75,600–76,000 range, while key support is seen around the 74,500–74,200 zone. 

Strategy

Mishra suggests leaning toward safer bets. "Sectorally, defensive themes such as pharma, healthcare, select FMCG, and energy- and metal-linked businesses may continue to offer relative stability," he advised. Conversely, Mishra warned that IT, rate-sensitive sectors, and segments exposed to discretionary consumption may remain under pressure amid slowing demand visibility and inflation concerns. 

“With crude oil continuing to trade at elevated levels and macro uncertainty remaining high, market participants are expected to maintain a defensive and selective approach in the near term,” Ponmudi said.