Strait of Hormuz-driven Elevated Oil Prices, G7 Meeting
Flows through the Strait of Hormuz remained heavily restricted, keeping the oil prices well-above $100 a barrel throughout the week before the Brent crude futures, the international oil benchmark, ended the week with an 8.7 percent rally at $109.14 a barrel. This ultimately is expected to impact import cost and increase the current account deficit, along with inflation concerns for the oil-importing nations, including India.
FOMC Minutes
Barring a ceasefire breakthrough that meaningfully restores Hormuz flows, elevated inflation pressures and the sharp repricing of Fed expectations are likely to remain the dominant drivers for both energy and metals markets in the near term. In the coming week, on the United States front, the market participants will closely watch FOMC minutes, May PMI readings, and University of Michigan inflation expectations data for further clarity on the policy outlook, particularly as Kevin Warsh begins his tenure as the new Fed Chair.
Global Economic Data
Apart from US economic releases, focus will also be on flash PMI readings of other nations, including Japan, the UK, and even Europe. China’s retail sales, industrial production, and unemployment rate data for the month of April will also be watched next week, while Japan will release its preliminary estimates for GDP growth of Q1-2026 and industrial production for March. The Eurozone’s inflation for April will also be watched.
Indian Rupee
On the home front, the market participants will keep an eye on the Indian rupee, which fell to a fresh all-time intraday low of 96.14 against the US dollar before ending at a new closing low of 95.96 with 1.57 percent depreciation, pressured by rising crude oil prices, which continue to weigh on import costs and inflation concerns. This was after the 0.43 percent gains in the previous week. The currency has weakened by 5.4 percent since the start of the US, Israel, and Iran war.
FII Flow
The focus will also be on the mood at Foreign Institutional Investors (FIIs), which caused pressure not only in the currency pair but also in equities. FIIs have net bought around Rs 1,500 crore in the last two days, but overall, net sold around Rs 13,600 crore worth shares in the week ended May 15, taking the net outflow in the current month to Rs 24,600 crore and in the year to Rs 2.65 lakh crore of selling.
Corporate Earnings
The March quarter earnings season will be in full swing as it approaches the end. Nearly 700 companies are set to release their quarterly earnings scorecard in the coming week, including prominent names from the Nifty 50 like Bharat Electronics, ITC, and Sun Pharmaceutical Industries. Grasim Industries, NTPC, Eicher Motors, Hindalco Industries, and Apollo Hospitals Enterprise.
Domestic Economic Data
Economic releases like infrastructure output for April and HSBC Manufacturing & Services PMI flash for May will also be watched next week. Manufacturing PMI rose to 54.7 percent in April from 53.9 percent in the same period, while Services PMI jumped to 58.8 percent from 57.5 percent in the same period.