5 key triggers for Sensex, Nifty next week; India-US trade deal, Q1 earnings, FPI flows

The Indian stock market is poised for a volatile week as multiple global and domestic cues unfold simultaneously. The top factors influencing investor sentiment include the anticipated India-US trade deal, the kick-off of Q1 FY26 earnings, foreign capital flows, monsoon progress, and the release of the US Federal Reserve's June meeting minutes.

During the week ended July 4, both the Nifty 50 and Sensex slipped 0.70%, snapping their two-week winning streak. Profit-booking, foreign capital outflows, and uncertainty over trade negotiations between India and the US weighed on the indices.

According to Ajit Mishra, SVP at Religare Broking, "Investors are cautious ahead of global trade deadlines and earnings. A potential interim trade agreement between India and the US may limit downside risks, but clear outcomes are crucial."

While large-cap indices corrected, mid- and small-cap segments continued their upward march. The Nifty Midcap 100 gained 0.5%, and the Smallcap 100 rose 0.3%, showing resilience amid broader volatility.

Here are 5 major triggers for the markets in the coming week:

1. India-US Trade Deal

The unresolved trade pact between India and the US remains a top market trigger. With US President Donald Trump's July 9 deadline approaching, investor anxiety is growing. Although Indian negotiators returned from Washington last week, Commerce Minister Piyush Goyal reiterated that India will not commit to any deal unless it serves the national interest.

A breakthrough could boost export-heavy sectors such as IT, pharma, and auto components. In contrast, any deadlock may dent near-term sentiment.

2. Q1 FY26 Earnings Season

India Inc’s Q1 results will start rolling in this week. IT bellwether TCS and Tata Elxsi will release their earnings on July 10, followed by DMart on July 11. Investors will watch closely for growth guidance, margin trends, and demand commentary, which will likely set the tone for sectoral momentum.

3. Monsoon Progress

India's southwest monsoon has shown healthy progress, with cumulative June rainfall exceeding the long-period average by nearly 9%. Improved monsoon activity is aiding kharif crop sowing, which is up by 11% year-on-year. With the IMD forecasting active rainfall over the next week, monsoon trends will continue to be a crucial macroeconomic monitor for inflation and rural demand.

4. Foreign Portfolio Investment (FPI) Trends

So far in July, FPIs have pulled out ₹5,773 crore from Indian equities amid uncertainty and valuation concerns. Experts suggest that clarity on the trade deal and robust Q1 earnings could reverse this trend. According to VK Vijayakumar of Geojit Financial, "A breakthrough in India-US trade talks and strong corporate earnings could revive FPI interest."

5. US Fed Minutes

Global markets will keep a close watch on the minutes of the US Federal Reserve’s June 17–18 meeting. These insights will offer clues on the Fed’s stance regarding inflation and potential interest rate cuts. Though a September rate cut is still expected, recent jobs data hint at a resilient labor market, possibly delaying policy easing.

Fed Chair Jerome Powell has stated that the inflationary impact of tariffs may start appearing in the coming months, suggesting a cautious Fed in the near term.