Dalal Street week ahead: AI jitters, global trends and key data to shape market mood

Bombay Stock Exchange

• Indian markets cautious due to global and AI disruption concerns
• Sensex and Nifty ended the week lower on tech stock selloff
• Investors eye macro data, FOMC minutes, and rupee movement

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Indian stock markets are expected to trade cautiously in the coming week as investors closely monitor key macroeconomic indicators, global geopolitical developments and growing concerns over disruptions linked to artificial intelligence, analysts told news agency PTI. Ongoing volatility is likely to keep sentiment restrained, with market participants watching both domestic and international triggers for clearer direction.

Apart from global triggers, the trading pattern of foreign institutional investors (FIIs) and movements in the rupee will also play a key role in shaping sentiment.

Vinod Nair, Head of Research at Geojit Investments Ltd, said near-term direction would largely depend on global cues. "In the near term, with tariff-related concerns easing and the domestic earnings season drawing to a close on a mixed trend, market focus will hinge largely on global cues, including the US labour data and shifting expectations surrounding the US Fed’s policy path.

"However, the overall sentiment is likely to remain cautious as investors monitor global AI-driven disruptions and geopolitical risks, while improved valuations and constructive GDP forecasts may help sustain FII inflows," Nair added that sectoral leadership could shift in the days ahead.

With IT and metals facing persistent structural and external headwinds, market leadership may rotate toward domestically oriented sectors such as banking, autos and select consumption-driven segments. However, broader indices are expected to remain range-bound until clearer macroeconomic and policy signals emerge, he said.

Weak Weekly Performance

On a weekly basis, the 30-share BSE Sensex slumped 953.64 points, or 1.14 per cent, while the NSE Nifty dropped 222.6 points, or 0.86 per cent. Both indices ended the week in the red, weighed down by a global selloff in technology stocks and concerns over AI-led disruptions.

Ajit Mishra, SVP (Research) at Religare Broking Ltd, said investors would closely monitor upcoming domestic data releases.

"Markets will monitor WPI inflation and balance of trade data for signals on price trends and external sector dynamics. High-frequency indicators due include HSBC flash PMI readings for manufacturing, services, and composite, along with bank loan growth and foreign exchange reserves data.

"These releases will be evaluated for confirmation of growth momentum amid volatile global cues and continued repricing in technology stocks,"

Global Factors in Focus

Markets had earlier drawn support from positive developments around the India-US trade deal and renewed FII inflows. However, that optimism faded as concerns over AI-related disruptions triggered sharp selling in IT stocks.

"Momentum extended on supportive global cues and rupee appreciation, although bouts of profit-booking emerged as Q3 earnings continued to deliver mixed signals. The sentiment turned cautious amid a global sell-off triggered by escalating concerns over AI-related disruptions, leading to sharp selling in IT stocks," Nair said.

The rupee consolidated in a narrow range and settled 5 paise lower at 90.66 against the US dollar on Friday. Geopolitical tensions and strong US jobs data further dampened sentiment, as robust employment numbers reduced expectations of near-term rate cuts by the US Federal Reserve.

Mishra noted that investors would also track the minutes of the Federal Open Market Committee (FOMC), due on Thursday, for cues on the US central bank’s policy outlook.

Analysts said until there is greater clarity on macroeconomic trends and policy direction, broader indices are likely to remain range-bound, with volatility continuing across sectors.