H2 CY2026: Six key events likely to shape market's trajectory

Experts said that monsoon outcome will be a key event/risk as a weak monsoon can raise food prices and hurt rural demand. This could have an impact on sectors like FMCG, auto, and fertilisers.

Markets remained volatile throughout H1 CY2026 as a series of events kept traders on edge. The first half of the year (January to June) ended on a weak note, with the Sensex slipping 10.2 per cent and the Nifty 50 falling 8.6 per cent

 

As markets move past H1, here are six events that are likely to shape the market in H2 CY2026.

 

1. Monsoon performance: July and August represent the peak sowing season, and poor monsoon could adversely impact agricultural output. Sunny Agrawal, head, fundamental research, SBI Securities, said that this may lead to a supply-side shock in food inflation. As a result, any inflationary impact is likely to remain contained in the short to medium term. 

 

 

"A weaker than expected monsoon could weigh on the rural economy and sectors that derive a significant portion of their demand from rural India," he said.

 

"Monsoon outcome will be a key event/risk as a weak monsoon can raise food prices and hurt rural demand. This could have an impact on sectors like FMCG, auto, and fertilisers. However, a good monsoon can provide a significant boost to rural demand and also help in lowering food inflation," Ankur Punj, MD & business head at Equirus Wealth, said.

 

2. Geopolitical tensions & crude oil prices: On the geopolitical front, any disruption to the West Asia peace process could again push crude oil prices higher. Sunny said that higher crude oil prices disrupt the supply of key commodities and such disruptions could increase input costs and exert pressure on inflation.

 

Echoing similar views, Ankur said that high oil prices have a direct impact on inflation and CAD. This can hurt sectors like airlines, paints and chemicals. 

 

3. India–US trade deal: The market is eagerly waiting for the details of the trade deal. According to Sunny, any unexpected development on the tariff front could adversely affect export-oriented sectors. "The competitiveness of Indian exports will also depend on how tariff rates compare with those applicable to other Asian economies. Therefore, the final outcome of the trade negotiations remains a key monitorable for export-led businesses," he said.

 

4. Corporate earnings: The Street will keenly watch the corporate earnings growth in H2, especially in the backdrop of the West Asia war and tariffs. According to Sunny, banks and IT will play a crucial role in determining overall market performance.

 

"Earnings growth for the Nifty 50 has remained in the single digits over the past seven to eight quarters," Sunny said, adding that market expectations are for a return to double-digit earnings growth in FY2027. "However, if earnings continue to fall short of expectations, it could lead to renewed selling by FIIs and weigh on overall sentiment," he said.

 

5. Rupee trajectory: The Indian currency remains an important risk factor, given its influence on FIIs flows. From a liquidity perspective, Sunny said that a stable currency is essential. Excessive volatility in the exchange rate affects foreign capital flows and investor confidence. 

 

6. RBI monetary policy: Ankur Punj said that markets are debating whether RBI may need to increase rates to check inflation. Any rate hike will negatively impact the markets as it will directly reduce liquidity, prompting capital to shift toward fixed-income assets.   ============================================ 

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