diff --git a/lisp/nxml/nxml-mode.el b/lisp/nxml/nxml-mode.el
index 3869d0327fd..7317f7186ff 100644
--- a/lisp/nxml/nxml-mode.el
+++ b/lisp/nxml/nxml-mode.el
@@ -1378,60 +1378,35 @@ nxml-compute-indent-from-previous-line
 		   (not (or (= xmltok-start (point))
 			    (eq xmltok-type 'data))))))
 	(setq ref (point))
-	;; Now scan over tokens until the end of the line to be indented.
-	;; Determine the context before and after the beginning of the
-	;; line.
-	(while (< (point) eol)
-	  (nxml-tokenize-forward)
-	  (cond ((<= bol xmltok-start)
-		 (setq after-context
-		       (nxml-merge-indent-context-type after-context)))
-		((and (<= (point) bol)
-		      (not (and (eq xmltok-type 'partial-start-tag)
-				(= (point) bol))))
-		 (setq before-context
-		       (nxml-merge-indent-context-type before-context)))
-		((eq xmltok-type 'data)
-		 (setq before-context
-		       (nxml-merge-indent-context-type before-context))
-		 (setq after-context
-		       (nxml-merge-indent-context-type after-context)))
-		;; If in the middle of a token that looks inline,
-		;; then indent relative to the previous non-blank line
-		((eq (nxml-merge-indent-context-type before-context)
-		     'mixed)
-		 (goto-char prev-bol)
-		 (throw 'indent (current-column)))
-		(t
-		 (throw 'indent
-			(nxml-compute-indent-in-token bol))))
-	  (skip-chars-forward " \t\r\n"))
-	(goto-char ref)
-	(+ (current-column)
-	   (* nxml-child-indent
-	      (+ (if (eq before-context 'start-tag) 1 0)
-		 (if (eq after-context 'end-tag) -1 0))))))))
-
-(defun nxml-merge-indent-context-type (context)
-  "Merge the indent context type CONTEXT with the token in `xmltok-type'.
-Return the merged indent context type.  An indent context type is
-either nil or one of the symbols `start-tag', `end-tag', `markup',
-`comment', `mixed'."
-  (cond ((memq xmltok-type '(start-tag partial-start-tag))
-	 (if (memq context '(nil start-tag comment))
-	     'start-tag
-	   'mixed))
-	((memq xmltok-type '(end-tag partial-end-tag))
-	 (if (memq context '(nil end-tag comment))
-	     'end-tag
-	   'mixed))
-	((eq xmltok-type 'comment)
-	 (cond ((memq context '(start-tag end-tag comment))
-		context)
-	       (context 'mixed)
-	       (t 'comment)))
-	(context 'mixed)
-	(t 'markup)))
+        ;; scan over the prevous line to determine the additional
+        ;; depth of element nesting.  Also collect the depth change at
+        ;; the beginning of the line.
+        (let ((depth-before 0)
+              (depth-bol 0))
+          (nxml-tokenize-forward)
+          (when (> (point) bol)         ; one token spans this and the line before
+            (throw 'indent (nxml-compute-indent-in-token bol)))
+          (while (< (point) bol)
+            (cond ((eq xmltok-type 'partial-start-tag)
+                   (throw 'indent (nxml-compute-indent-in-token bol)))
+                  ((memq xmltok-type '(start-tag))
+                   (cl-incf depth-before))
+                  ((memq xmltok-type '(end-tag partial-end-tag))
+                   (cl-incf depth-before -1)))
+            (skip-chars-forward " \t\r\n")
+            (nxml-tokenize-forward))
+          (when (<= xmltok-start eol)
+            (cond ((memq xmltok-type '(start-tag partial-start-tag data))
+                   (setq depth-bol 1))
+                  ((memq xmltok-type '(end-tag partial-end-tag))
+                   (setq depth-bol -1))))
+          (goto-char ref)
+	  (+ (current-column)
+	     (* nxml-child-indent
+                ;; never change more than one indent level
+                (cl-signum (if (eq depth-before 0)
+                               (min 0 depth-bol)
+                             (+ (cl-signum depth-before) depth-bol))))))))))
 
 (defun nxml-compute-indent-in-token (pos)
   "Return the indent for a line that starts inside a token.
diff --git a/test/lisp/nxml/nxml-mode-tests.el b/test/lisp/nxml/nxml-mode-tests.el
index 973f2ebb67e..f5a691ee181 100644
--- a/test/lisp/nxml/nxml-mode-tests.el
+++ b/test/lisp/nxml/nxml-mode-tests.el
@@ -31,6 +31,17 @@ nxml-mode-tests-correctly-indented-string
 
 (ert-deftest nxml-indent-line-after-attribute ()
   (should (nxml-mode-tests-correctly-indented-string "
+<settings xmlns=\"http://maven.apache.org/SETTINGS/1.0.0\"
+          xmlns:xsi=\"http://www.w3.org/2001/XMLSchema-instance\"
+          xsi:schemaLocation=\"http://maven.apache.org/SETTINGS/1.0.0
+                              https://maven.apache.org/xsd/settings-1.0.0.xsd\">
+  <mirrors one=\"two\"
+           three=\"four\">
+    ...
+  </mirrors>
+</settings>
+"))
+  (should (nxml-mode-tests-correctly-indented-string "
 <settings
     xmlns=\"http://maven.apache.org/SETTINGS/1.0.0\"
     xmlns:xsi=\"http://www.w3.org/2001/XMLSchema-instance\"
@@ -155,5 +166,46 @@ nxml-mode-test-comment-bug-17264
       ;; Inside comment
       (should (eq (nth 4 (syntax-ppss)) t)))))
 
+(ert-deftest nxml-mode-test-multiple-start-tags-single-line ()
+  "Test for Bug#7937."
+  (with-temp-buffer
+    (should (nxml-mode-tests-correctly-indented-string "<kml>
+  <Document>
+    <Folder><name>abc</name>
+      <Folder><name>123</name>
+      </Folder>
+    </Folder>
+  </Document>
+</kml>"))
+    (should (nxml-mode-tests-correctly-indented-string "<kml>
+  <Document>
+    <Folder><name>abc</name>
+      <Folder></Folder>
+    </Folder>
+  </Document>
+</kml>"))
+    (should (nxml-mode-tests-correctly-indented-string "<kml>
+  <document></document>
+  <more><name></name>
+  </more>
+  abckde
+  <!-- stuff -->
+  <more><name>e<inner><!-- x --></inner>
+    <inner2 />
+  </name></more>
+  <more><name></name><inner>
+    <inner2 />
+  </inner></more>
+  <up>
+    <more><name><here><name>x
+    </name></here></name></more>
+    <nl>abc</nl>
+    <nl>abc</nl>
+  </up>
+  <nl>abc</nl>
+</kml>
+"))))
+x
+
 (provide 'nxml-mode-tests)
 ;;; nxml-mode-tests.el ends here