Indian Markets Set for Flat Opening Amid Mixed Global Cues

The Indian stock market continued its downward trajectory on Monday, marking the seventh straight session of losses as investor caution prevailed. The Sensex slumped by 61.52 points, representing a 0.08% decline, to close at 80,364.94, while the Nifty 50 mirrored this movement with a 19.80 point drop, also 0.08%, settling at 24,634.90. This persistent decline underscores the challenging environment facing domestic investors amid global economic crosscurrents.

Early indicators for Tuesday’s trading session suggest limited momentum, with Gift Nifty trading near 24,692, approximately 7 points higher than the previous Nifty futures close. This marginal upward movement hints at a lackluster opening for Indian markets, reflecting the cautious sentiment that has characterized recent trading sessions. The extended losing streak represents one of the most prolonged periods of decline for Indian indices in recent months, testing investor resilience.

While Indian markets struggled, US stocks demonstrated resilience with broad-based gains on Monday. The technology sector emerged as the primary driver of this upward movement, with the Nasdaq Composite advancing by 107.09 points, or 0.48%, to finish at 22,591.15. The S&P 500 followed with a 17.51 point increase, representing a 0.26% gain, ending at 6,661.21, while the Dow Jones Industrial Average posted more modest growth, surging by 68.78 points, or 0.15%, to close at 46,316.07.

This strong performance from US markets, however, failed to translate into uniform positive sentiment across global exchanges. Asian markets traded mixed, creating conflicting signals for Indian investors. The technology-led rally on Wall Street typically provides positive momentum for global markets, but the mixed Asian response indicates that regional concerns and specific economic conditions are tempering optimism in the broader Asian trading bloc.

Multiple significant international developments are currently shaping market sentiment. The Trump administration imposed new trade measures, including a 10% tariff on lumber imports and a 25% tariff on vanities, kitchen cabinets, and upholstered wooden products, effective October 14. More substantially, the administration announced plans to raise tariffs to 30% on upholstered wooden products and to 50% on kitchen cabinets and vanities imported from non-compliant countries starting January 1, potentially escalating global trade tensions.

Simultaneously, concerns about a potential US government shutdown are mounting, with US Vice President JD Vance predicting such an outcome, stating, ‘I think we’re headed to a shutdown.’ This assessment came after President Donald Trump and Democratic leaders made little progress during a White House meeting aimed at preventing the shutdown, creating additional uncertainty in global financial markets.

Federal Reserve officials provided mixed signals regarding monetary policy direction. St. Louis Federal Reserve President Alberto Musalem signaled openness to further interest rate cuts but emphasized caution, stressing the need to maintain rates sufficiently high to curb inflation that remains approximately one percentage point above the Fed’s 2% target. Meanwhile, New York Fed President John Williams indicated that weakness in the labor market drove his support for rate cuts at the most recent Fed meeting.

Commodity markets showed weakness, with Brent crude slumping by 0.66% to $67.52 per barrel and US West Texas Intermediate crude trading 0.60% lower at $63.07 per barrel. These declines in crude oil prices reflect concerns about global demand and add another layer of complexity to the market outlook, particularly for energy-sensitive economies and sectors.

In Asia, China’s manufacturing activity contracted for the sixth consecutive month in September, though the official purchasing managers’ index showed modest improvement, climbing to 49.8 from 49.4 in August. Despite beating Reuters’ forecast of 49.6, the index remained below the 50-point growth threshold, indicating continued contraction in the world’s second-largest economy. Meanwhile, the Bank of Japan revealed that board members debated whether to raise interest rates in the near term, with one member suggesting the timing may now be appropriate, according to the summary of opinions from the September policy meeting.