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Below the Quote on Daily Market Commentary for May 22nd 2026 By Siddhartha Khemka, Motilal Oswal Financial Services Ltd

Indian equities next week could witness volatility amid the monthly expiry along with gradual upside given crude oil prices continue to soften, the Indian rupee sustains its recovery from recent record lows and constructive developments in the ongoing peace talks continue. However, mixed signals emerging from the negotiations continue to limit confidence around a complete near-term settlement, keeping overall investor sentiment cautious and fragile. Indian markets ended Friday’s session on a positive note, supported by strength in banking stocks and improving optimism surrounding the ongoing US-Iran peace discussions. Investor sentiment improved after comments from US officials suggested that diplomatic talks with Iran were progressing constructively, raising expectations of a potential easing in geopolitical tensions across West Asia. The rally was further aided by Brent crude prices cooling toward the USD 104–105 per barrel range, which provided temporary relief to concerns surrounding India’s import bill, inflation outlook and pressure on the domestic currency. Banking and financial stocks led the gains after reports indicated that RBI may avoid an off-cycle interest rate hike despite persistent rupee weakness. However, the index pared gains during the second half of the session to eventually close with modest gains of 0.2% at 23,716. Meanwhile, the Indian rupee recovered after four consecutive sessions of sharp weakness and currently at 95.6 against the US dollar, supported by easing crude oil prices and likely intervention by the Reserve Bank of India. Broader markets remained mixed, with the Midcap100 index gaining 0.1%, while the Smallcap100 index declined 0.1%, reflecting cautious participation beyond frontline stocks. Sectorally, Nifty Private Bank and Cement indices emerged as the top-performing sectors during the session, whereas Healthcare, Media and Pharma stocks were among the key laggards.  On the regulatory front, Sebi proposed changes to the IPO and re-listed stock price discovery mechanism aimed at improving transparency and reducing listing-day volatility. The move is expected to strengthen investor confidence, improve market efficiency and enable more accurate price discovery in primary markets. Additionally, the Reserve Bank of India is expected to transfer a record dividend of nearly rupees 3 lakh crore to the government for FY26, which could provide fiscal support.  On the geopolitical and strategic front, Prime Minister Narendra Modi returned to New Delhi on Thursday, concluding his five-nation diplomatic tour, which resulted in multiple strategic agreements across defence, energy, semiconductors and technology. Key outcomes included a Green Strategic Partnership with Norway, a 30-million-barrel strategic petroleum reserve agreement with the UAE, critical minerals and defence co-production agreements with Italy, and a strategic semiconductor collaboration between Tata Electronics and Dutch semiconductor equipment giant ASML. India and Norway also signed agreements across green energy, shipbuilding and space cooperation, while bilateral ties with Italy were elevated to a “Special Strategic Partnership.”

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