Stock Market Next Week: US-Iran Talks, Fuel Price Hike, US GDP Data, And More

Benchmark indices concluded the last week with marginal gains, showing a range-bound movement, amid persistent weakness in the rupee, volatility in oil prices due to the uncertain environment in West Asia, and lack of certainty around interest rates.

During the week, Sensex gained 0.23 per cent at 75,415.35, and Nifty 50 settled 0.32 per cent higher at 23,719.30.

The broader market indices also ended with marginal gains, with the Nifty Midcap 100 gaining more than 1 per cent and Nifty Smallcap 100 closing flat-to-positive.

The progress in US-Iran talks helped ease crude oil prices. Brent crude oil futures cooled off around 4 per cent to $103.50 per share.

Stock Market Cues Next Week

The coming week, from May 25 to May 29, is expected to be driven largely by geopolitical developments and their impact on global markets.

US-Iran Negotiations

Tensions between Iran and the US remained a major global market trigger last week, keeping investors worried about crude oil prices and overall market sentiment. In a latest development, Iran accused the US of making “excessive demands” during ongoing talks, while reports said US President Donald Trump is “seriously considering” fresh strikes against Iran if negotiations fail.

At the same time, Pakistan Army Chief Asim Munir met Iranian Foreign Minister Abbas Araqchi in Tehran as Pakistan increased diplomatic efforts to help reduce tensions between Iran and the US, Iranian state media reported on May 22. The report said both sides discussed possible diplomatic steps to prevent further escalation and end the ongoing conflict.

Fuel Price Hike

Oil marketing company (OMC) stocks will likely be in focus this week after petrol and diesel prices were increased for the third time in eight days on May 23, 2026. Fuel prices were raised by an average of 90 paise per litre across the country.

Markets will also keep a close watch on tensions in West Asia, as any further rise in conflict between the two countries could push crude oil prices higher and increase global inflation concerns.

Higher crude oil prices can affect the profit margins of OMCs such as Indian Oil, BPCL, and HPCL, while also putting pressure on India’s import bill and the rupee.

Movements in Rupee

The rupee traded largely range-bound last week, although it briefly slipped towards the 97-per-dollar mark midweek amid sustained strength in the US dollar, elevated crude oil prices, and continued foreign institutional investor (FII) outflows. However, the domestic currency recovered some ground towards the end of the week and settled at 95.70 against the US dollar.

The recent rise in US bond yields also weighed on emerging market currencies, including the rupee, as higher yields tend to strengthen the dollar and trigger capital outflows from risk assets.

Going ahead, market participants will closely track the movement in US bond yields, FII activity, developments in US-Iran negotiations, and crude oil prices, all of which are expected to influence the rupee’s trajectory in the near term.

FII Selling

FII) have sold Indian equities worth another Rs 30,374 crore so far this month, after pulling out Rs 1.17 lakh crore in March and nearly Rs 60,850 crore in April.

With this, total FII selling in 2026 has reached around Rs 2.22 lakh crore so far. Financial stocks accounted for nearly half of the total outflows.

Sustained FII outflows may also keep pressure on the rupee, as persistent FII selling typically increases demand for the US dollar.

US GDP Data

Market participants will closely watch the second estimate of US economic growth for the January-March quarter, which will be released on May 28.

The first estimate showed that the US economy grew at an annualised rate of 2.0 per cent in the first quarter, higher than 0.5 per cent growth in the previous quarter.

The revised data may change after authorities include more detailed numbers related to trade, services, and inventories. Investors will track the data for clues on the strength of the US economy and the US Federal Reserve’s interest rate outlook.