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Informist, Friday, May 8, 2026

By Arya S. Biju

MUMBAI – Benchmark equity indices are expected to move in a range in the coming week, amid the absence of a meaningful breakthrough in the West Asia war. However, the mid- and small-cap indices are seen extending their outperformance compared to their benchmark peers, supported by attractive valuations, analysts said. 

Analysts expect the heightened volatility in the market to continue in the near term after the renewed attacks between the US and Iran in the Strait of Hormuz further threatened an already fragile ceasefire and dented hopes of a resolution to the conflict. "While the initial shock is absorbed, the lack of a breakthrough in the Strait of Hormuz keeps the sentiment 'risk-off'," Vinit Bolinjkar, head of research at Ventura Securities, said. 

While further fall in the benchmark indices are expected, a "deep panic-led crash still doesn't look like the base case unless the geopolitical situation deteriorates significantly from here," Ravi Singh, chief research officer at Master Capital Services, said. "At the moment, markets are reacting sharply to every headline, so near-term direction will largely depend on how the US-Iran talks progress," he added. Even though the road ahead is slightly bumpy, optimism around a possible diplomatic resolution of the war persists, Vinod Nair, head of research at Geojit Investments, said in a note.  

Going forward, analysts expect crude price to remain volatile rather than a straight upward move. "For now, oil prices are being supported more by geopolitical fears than by strong demand. If tensions remain elevated, crude can continue trading in the $95–($)105 (per barrel) range over the near term. However, sustaining much above $110 (per barrel level) may still be difficult unless there is a major escalation or prolonged disruption in shipping activity. At the same time, even small signs of diplomatic progress are cooling prices quickly, which also suggests that underlying demand conditions globally are not extremely strong right now," Singh said. 

Even though March quarter earnings had been largely better-than-expected, management commentary has become more cautious. "Companies are talking more about cost pressures, pricing challenges, and uncertainty in demand rather than aggressive expansion or strong growth visibility," Singh said. The bigger issue is that companies cannot pass on higher costs immediately, he said, adding that the delay impacts profitability and could eventually lead to earnings downgrades if crude remains elevated for an extended period.

Going forward, benchmark indices may continue to feel the pressure while broader market indices are expected to continue its resilience with liquidity constantly focusing on these funds, Ajit Mishra, senior vice president research at Religare Broking, said. Friday, the Nifty 50 index settled at 24176.15, down 150.50 points or 0.6%. Next week, the 50-stock index is seen finding support at 23800 points and resistance at 24800 points, Mishra said.

Going forward, investors will continue to focus on opportunities arising from favourable corporate earnings, with valuations in several mid- and small-cap counters still appearing attractive, Nair said. Pharmaceuticals, defence, and metal stocks are expected to remain in focus in the near-term. While pharma stocks are likely to benefit from their defensive nature and rupee tailwinds supporting export earnings, defence stocks continue to gain on strong order inflows and rising geopolitical engagements, Siddhartha Khemka, head of research-wealth management at Motilal Oswal Financial Services, said. Metal stocks are expected to be supported by rising prices and improving global demand trends, Khemka added.  End

US$1 = INR 94.4800

Edited by Tanima Banerjee

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