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The market began its Diwali celebrations early, clocking a rally of more than 8 percent in the extended trading week ended November 8. This was its biggest weekly gain since February 2021, with the Nifty 50 reclaiming the 25,000 mark and the Sensex crossing 81,000 for the first time since February 2026, before ending the week slightly below these levels.

The outcome of the US midterm elections revived hopes of de-escalation in the Iran conflict and a softer stance on tariffs. A decline in oil prices to below $100 a barrel, US 10-year Treasury yields slipping below the 5 percent mark, a strengthening rupee, a strong Q2 earnings scorecard and firm GST collections boosted bullish sentiment.

Healthy buying interest from foreign investors in Indian equities in recent sessions, along with hopes of tax relief in the upcoming Union Budget, provided further fuel to the rally. The market also shrugged off an AI-led sell-off in global equities.

Going ahead, the holiday-shortened week is expected to retain a positive bias, supported by the healthy broader market structure, although some consolidation and profit booking cannot be ruled out. Key triggers will include India's inflation data, the remaining September-quarter earnings announcements, inflation readings from the US and China, any diplomatic progress towards resolving US-Iran tensions, and FII activity.

The Nifty 50 rallied 1,933 points, or 8.39 percent, during the week to close at 24,986, while the BSE Sensex surged 6,540 points, or 8.78 percent, to end at 80,999. Both benchmarks extended their uptrend for a second consecutive week. However, the Nifty Midcap 100 and Smallcap 100 indices underperformed the benchmarks, gaining 5.91 percent and 3.81 percent, respectively.

"Indian equities are expected to maintain a positive bias in the near term, supported by strong FII inflows, currency appreciation and resilient domestic fundamentals," said Siddhartha Khemka, Head of Research, Wealth Management, at Motilal Oswal Financial Services.

Market participation remained largely broad-based through the week, with strong buying interest across key indices. Private banks, which had been under pressure in recent weeks amid margin concerns, led the rally, supported by renewed foreign investor interest. Auto and consumption-oriented stocks also gained on the back of festive demand.

According to Vinod Nair, Head of Research at Geojit Investments, the rally's sustainability will depend on market breadth holding up and hopes of de-escalation translating into concrete progress in West Asia. After such a sharp run-up, intermittent profit booking cannot be ruled out, but the near-term bias remains constructive.

Investors should remain selective, favour large-cap stocks with earnings visibility and follow a buy-on-dips strategy, he advised.

US CPI data will shape expectations around the Federal Reserve's policy outlook, with officials still signalling the possibility of further rate hikes. In India, the CPI reading and the remaining Q2 earnings announcements will be the key triggers, he said.

The market will remain shut on November 10 for Diwali Balipratipada.

Here are 10 key factors to watch next week:

1) Corporate Earnings

The market participants will see the final lot of September quarter earnings with more than 1,600 companies releasing their quarterly earnings scorecard next week including Nifty 50 names like Eicher Motors, and Grasim Industries.

Among others, Tata Motors Passenger Vehicles, Tata Power Company, Vodafone Idea, Whirlpool of India, Oil India, Ola Electric Mobility, Kalyan Jewellers India, MRF, Rentomojo, EAAA India Alternatives, Hindustan Copper, Alkem Laboratories, Amber Enterprises, Bharat Dynamics, Bonfiglioli Transmissions, Hindustan Aeronautics, HD Fire Protect, Indian Railway Catering and Tourism Corporation, Manappuram Finance, Rays of Belief, Hitachi Energy India, Turtlemint Fintech Solutions, ABB India, Edelweiss Financial Services, Godrej Industries, Inox Wind, Jubilant Pharmova, Natco Pharma, Runwal Enterprises, Rail Vikas Nigam, Senco Gold, TVS Supply Chain Solutions, Zaggle Prepaid Ocean Services, Ashok Leyland, Brainbees Solutions, Hero Motors, and Western Carriers (India) will also announce their quarterly earnings.

2) US Inflation

Globally, the focus will be on US inflation and Producer Price Index (PPI) data, along with speeches by several Federal Reserve officials and weekly jobless claims data. Following a stronger-than-expected jobs report, a hotter-than-expected inflation reading, if any, could reinforce expectations of a December rate hike and lend support to the US dollar.

US inflation rose to 3.7 percent in September from 3.4 percent in the previous month, driven by higher energy prices. Meanwhile, the Producer Price Index (PPI) for final demand increased 1.3 percent in September and climbed 6.3 percent in the 12 months ended September 2026, marking the largest 12-month increase since the 6.4 percent rise recorded in December 2022.

Further, markets will assess how a divided government could influence fiscal, regulatory and tariff policies, particularly those related to AI and copper. Investors will also watch whether technology stocks can stabilise and ease deleveraging pressures, said Kaynat Chainwala of Kotak Neo.

3) Global Economic Data

Apart from US economic releases, the participants will also keep an eye on the China's monthly inflation and vehicle sales; Japan's household spending and PPI numbers, and Europe's second estimates for Q3-2026 GDP growth data due next week.

4) Oil Prices

Oil prices will remain in focus, although they have fallen sharply on hopes of de-escalation in the Iran war and possible diplomatic efforts to resolve the tensions.

Brent crude futures, the international oil benchmark, plunged 13 percent, while US West Texas Intermediate (WTI) crude futures declined 12.2 percent, marking their sharpest fall since April 2026. The decline followed a Democratic sweep that reduced expectations of further US escalation against Iran and increased the likelihood of a renewed diplomatic push.

The easing of the geopolitical risk premium dragged Brent to $93.20 and WTI to $86.60 during the week. However, prices subsequently recovered to settle at $97.69 and $90.28, respectively, as continued tanker attacks and restricted flows through the Strait of Hormuz highlighted the persistence of physical supply risks.

"The rebound suggests that the market may have moved too quickly to discount a diplomatic resolution. With Gulf exports still normalising, negotiations likely to be prolonged and regional shipping risks unresolved, crude should remain highly sensitive to geopolitical developments," Kaynat Chainwala said.

Moreover, ADNOC's chief executive estimates that global inventories have declined by nearly 1 billion barrels, potentially limiting the market's ability to absorb further supply disruptions.

According to Kaynat, the central question for crude is whether Washington chooses to resume strikes, maintain economic pressure or pursue a deal. Qatar has proposed a plan under which the US would lift its naval blockade and release part of Iran's frozen assets in return for Tehran reopening the Strait of Hormuz and resuming nuclear talks. Meanwhile, Tehran has laid out seven conditions, including sanctions relief.

Progress on the diplomatic front could extend the decline in oil prices, while a breakdown in negotiations or renewed tanker attacks could quickly push Brent back above $100, she said.

5) Inflation

Back home, apart from corporate earnings, the October inflation data, due on November 12, will be closely watched. The reading will be one of the key factors influencing the central bank's interest rate decision at its December policy meeting.

Inflation rose to 5.54 percent in September from 4.83 percent in August, extending its upward trend for the 11th consecutive month, as a sharp acceleration in food prices pushed up household expenses.

Further, foreign exchange reserves data for the week ended November 6, along with bank loan and deposit growth figures for the fortnight ended October 30, will be released on November 13.

6) FII Flow

The sudden and significant shift in sentiment among foreign institutional investors (FIIs) will also be closely watched next week, as they turned aggressive buyers of Indian equities, investing Rs 45,960 crore during the week ended November 8. Their substantial buying played a crucial role in driving the markets sharply higher.

The sudden shift in foreign portfolio investor (FPI) sentiment was triggered by the sell-off in AI-related stocks in the US and other AI-focused markets, including South Korea, Taiwan and Japan. The sell-off, in turn, was driven by concerns surrounding data centre spending in the US. The Democrats, who won control of both chambers of Congress, are opposed to indiscriminate spending on data centres and are likely to demand stronger safeguards for AI.

"The AI sell-off has made India, which is widely regarded as a non-AI trade, attractive for FPIs. Furthermore, the impressive earnings growth in India and attractive large-cap valuations have made the country a favoured investment destination," said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.

Meanwhile, domestic institutional investors (DIIs) preferred to book profits. However, robust foreign inflows comfortably absorbed the selling pressure. DIIs were net sellers of shares worth Rs 24,900 crore during the week, marking their first significant weekly selling after a prolonged period.

Meanwhile, the Indian rupee appreciated 1.1 percent to 93.89 against the US dollar after consolidating over the previous two sessions. The recovery was supported by significant FII buying and improving foreign fund flows.

"Going ahead, the key risk for the domestic currency remains a sharp rise in crude oil prices, particularly if US-Iran tensions escalate into a wider conflict. In the absence of such geopolitical disruptions, the rupee's positive momentum could continue, with the next potential target around 93.50 in the coming sessions," said Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities.

7) IPO Action

The primary market is set to remain quiet during the Diwali holiday-shortened week, with no new IPO launches scheduled in either the mainboard or SME segments. Only two SME companies are slated to list: Vedant Poly Fabs will make its market debut on November 9, followed by Antala Industries on November 11.

8) Technical View

Technically, the Nifty 50 is expected to witness some consolidation and moderate profit booking following its sharp rally. However, the broader market structure remains bullish, as the index continues to trade comfortably above all key moving averages and has sustained above its 200-day EMA for the fourth consecutive session.

In terms of key levels, the index is likely to find support at 24,800, which was an earlier resistance level and has now turned into support, followed by the crucial support zone of 24,400–24,300. On the upside, the index may face an immediate hurdle at 25,200. A sustained move above this level could open the door for an advance towards 25,500, which coincides with the 78.6 percent Fibonacci retracement level of the decline from 26,373 to 22,180.

9) F&O Cues, India VIX

The weekly options data also indicated that the 25,500 strike, which has the highest Call open interest, could act as a crucial resistance for the Nifty 50 in the coming sessions. This is followed by the 25,000–25,200 zone, which has the next-highest Call open interest and is likely to act as an immediate hurdle.

On the downside, the 24,500 strike, where the maximum Put open interest is concentrated, is expected to provide crucial support for the index.

Meanwhile, the India VIX, the market's fear gauge, surged 20.44 percent during the week to 18.43, signalling rising volatility and warranting caution among bulls despite the prevailing bullish momentum.

10) Corporate Action

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.