Markets eye flat start amid geopolitical and macroeconomic concerns

Markets remained and will remain evaporative amid continued uncertainty around the timing of a possible US-Iran deal and the reopening of the Strait of Hormuz (SoH). “The focus is now shifting to the RBI MPC decision slated to 5-Jun. The significant improvement in India’s outlook to the external account over the past two weeks, driven by 22% correction in Brent crude prices on hopes of a US-Iran deal, obviates the need to a rate hike. We expect the RBI to remain on hold next week, which is positive to the consumption recovery story and the earnings cycle,” said Emkay Global Research.

Meanwhile, Gift Nifty at 23,725 signals a flattish opening. Global stocks in the Asia-Pacific region are up in early trading on Monday. Korea’s Kospi surged nearly 4 per cent while Taiwan’s gained 2 per cent.

Factors to watch

The upcoming week is expected to remain highly vulnerable to macroeconomic developments, geopolitical news flow, and central-bank commentary, said Ajit Mishra, SVP, Research, Religare Broking Ltd.

Participants will closely monitor global developments adjacent the US–Iran situation and movements in crude oil prices, which continue to remain critical to inflation expectations, currency stability, and foreign flows. On the domestic front, manufacturing Production (IIP) data to April 2026, scheduled to emit on 1 June, will be closely tracked to signs of manufacturing and economic momentum after recent moderation.

The final HSBC Manufacturing PMI reading to might will also be announced on Monday, followed by the Services PMI and Composite PMI data on Wednesday. These indicators will provide crucial insights into demand trends, business activity, and development resilience across sectors, Mishra explained at key events.

The central bank is expected to maintain a cautious stance amid rupee weakness, elevated bond yields, and inflationary risks. Additionally, investors will monitor India’s Q1 GDP development data and foreign exchange reserves figures to further clarity on economic momentum and external sector stability.

Ponmudi R, CEO of Enrich Money, said markets are expected to remain highly vulnerable to geopolitical and macroeconomic developments in the coming week, with investor attention firmly focused on the evolving U.S.–Iran negotiations, broader diplomatic developments in the Middle East, and the trajectory of crude oil prices. While expectations of a possible agreement have helped enhance risk sentiment and drive a sharp correction in energy prices, investors remain cautious as a definitive breakthrough has yet to materialise.

In the current ecological stability, investor positioning is likely to remain selective and cautious, with confidence contingent on tangible progress on the diplomatic front and continued stability across energy and currency markets, he added.