Indian domestic equity markets concluded the week on a negative note, snapping a two-week winning streak. The BSE Sensex recorded a 2.70% decline, closing at 75,237.99, while the NSE Nifty fell 2.20% to settle at 23,643.50. Both indices saw a slight dip of approximately 0.2% on Friday.
Despite the recent downturn, early indicators suggest a potentially positive opening for Monday, May 18, with Nifty futures on the NSE International Exchange showing a gain of 61 points, trading at 23,769.
Global Headwinds and Inflation Concerns
Market experts point to several factors contributing to the current volatility. Ajit Mishra, SVP of Research at Religare Broking Ltd, highlighted the escalating tensions in West Asia and the uncertainty surrounding the US–Iran conflict. These geopolitical factors have kept energy markets highly volatile, pushing Brent crude prices above $105 per barrel.
“Rising energy prices triggered concerns over inflation, widening trade deficits, and margin pressures across energy-sensitive sectors,” Mishra stated. Vinod Nair, Head of Research at Geojit Investments Ltd, added that investor focus has shifted towards rising inflation risks, fueled by higher-than-expected Wholesale Price Index (WPI) prints, ongoing fuel price pass-throughs, and elevated bond yields.
Foreign institutional investors (FIIs) were net sellers for most of the week, with outflows exceeding Rs 13,500 crore. However, domestic institutional investors (DIIs) provided significant stability, recording net inflows of around Rs 18,500 crore, which helped absorb the selling pressure.
Key Levels to Watch for Nifty and Sensex
Investors should closely monitor critical support and resistance levels. According to Ajit Mishra, the Nifty 50-pack index experienced a breakdown from its 23,800–24,500 consolidation range, signaling a weakening market structure. He identified the 23,800–24,000 zone as immediate resistance, with 23,150 serving as a critical support level, followed by 22,900.
Ponmudi R, CEO of Enrich Money, concurred, placing near-term support for the Nifty in the 23,500–23,400 zone. He cautioned that a break below this range could expose the index to the 23,200–23,000 zone.
For the Sensex 30-pack index, Ponmudi noted it is trading near the 75,200–75,300 zone. Immediate resistance is projected in the 75,600–76,000 range, while key support is anticipated around the 74,500–74,200 zone.
Investment Strategy Amidst Uncertainty
Given the prevailing macro uncertainty and elevated crude oil prices, market participants are advised to adopt a defensive and selective approach. Ajit Mishra suggests leaning towards safer bets, identifying specific sectors that may offer relative stability.
- Defensive Themes: Pharma, healthcare, select FMCG, and energy- and metal-linked businesses.
Conversely, Mishra warned that certain sectors might remain under pressure due to slowing demand visibility and inflation concerns.
- Sectors to Avoid/Underperform: IT, rate-sensitive sectors, and segments exposed to discretionary consumption.
Ponmudi emphasized that investor sentiment will continue to be influenced by diplomatic negotiations, the US–Iran conflict, and global energy market movements. He added that any constructive progress toward reopening the Strait of Hormuz would be critical for restoring risk appetite and providing a more stable direction to the markets. Domestically, investors should track the infrastructure output data for April 2026, scheduled for release on May 20, for insights into industrial activity.