Indian Markets Set for Positive Start Amid Mixed Global Cues

Indian equity markets concluded last week on a negative note, with both major indices extending their losing streak to six consecutive sessions. The Sensex slumped by 733.22 points, representing a 0.90% decline to close at 80,426.46, while the Nifty 50 moved down by 236.15 points, falling 0.95% to settle at 24,654.70. This persistent downturn reflects growing investor concerns about foreign fund outflows and the impact of fresh US tariffs on pharmaceuticals, which have particularly affected sentiment in the Indian market.

However, early indicators suggest a potential reversal on Monday, with Gift Nifty trading near 24,810, approximately 120 points higher than the previous Nifty futures close. This positive signal comes despite the recent bearish trend and mixed global cues, indicating that domestic investors may be looking beyond immediate headwinds toward potential catalysts this week. The Reserve Bank of India’s monetary policy decision stands as a critical domestic trigger that could significantly influence market direction in the coming sessions.

US markets provided a mixed backdrop for global investors, with Friday’s session showing gains but weekly performance ending in negative territory. The Dow Jones Industrial Average surged by 299.97 points (0.65%) to close at 46,247.29, while the S&P 500 rose 38.98 points (0.59%) to end at 6,643.70. The Nasdaq Composite advanced by 99.37 points (0.44%) to finish at 22,484.07. Despite these daily gains, both the S&P 500 and Nasdaq broke their three-week winning streaks, reflecting underlying uncertainty in global markets.

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, showed a 0.3% increase in August following a 0.2% rise in July. On an annual basis, the index climbed 2.7%, marking the sharpest rise since February and exceeding July’s 2.6% gain. This inflation data, coming largely in line with expectations, provided some stability to US markets while simultaneously reinforcing concerns about persistent price pressures that could influence central bank policies globally.

Complementing the inflation data, US consumer spending grew faster than anticipated in August, rising 0.6% after an unchanged 0.5% gain in July. This robust consumer activity suggests underlying economic strength but also raises questions about whether such momentum could contribute to sustained inflationary pressures, creating a complex backdrop for global market sentiment and central bank decision-making.

Multiple geopolitical and economic developments are converging to shape market sentiment this week. The United States faces a looming government shutdown as the September 30 funding deadline approaches, with President Donald Trump scheduled to meet top Democratic and Republican leaders in Congress to negotiate an extension. Without a successful deal, the government will shut down on October 1, coinciding with the implementation of new US tariffs on heavy trucks, pharmaceuticals, and other products that have already impacted Indian market sentiment.

International tensions escalated significantly over the weekend as Russia launched one of its heaviest barrages on Ukraine since the war began, firing hundreds of drones and missiles at Kyiv and other regions. The attack resulted in at least four fatalities and dozens of injuries, with Russia’s defence ministry characterizing it as a ‘massive’ strike using long-range air- and sea-based weapons targeting Ukrainian military infrastructure. This escalation adds to global uncertainty and could influence energy markets and risk appetite.

Energy markets faced their own pressures as crude oil prices dropped nearly 1% after Iraq’s Kurdistan region resumed crude exports through Turkey over the weekend. Brent crude slumped by 0.03% to $69.29 per barrel, while US West Texas Intermediate (WTI) crude traded 0.15% lower at $64.89 per barrel. The resumption of exports, combined with expectations of another OPEC output hike in November, created additional downward pressure on oil prices, which could have mixed implications for import-dependent economies like India.

Indian investors face a complex landscape this week with multiple factors requiring careful monitoring. The RBI’s monetary policy decision stands as the primary domestic catalyst, with market participants keenly watching for any shifts in the central bank’s stance amid global uncertainty and domestic growth considerations. Simultaneously, progress on the India-US trade deal negotiations will be closely tracked, particularly given the recent imposition of tariffs on pharmaceuticals that have already affected market sentiment.

Foreign fund flows remain a critical variable, having contributed significantly to the recent six-session decline in Indian equities. The continuation or reversal of these outflows could determine whether Monday’s positive opening signal translates into sustained recovery. Additionally, global macroeconomic indicators, gold price trends, and evolving geopolitical developments—particularly surrounding the Russia-Ukraine conflict and US government funding negotiations—will collectively influence market direction throughout the week.

While the Gift Nifty’s positive indication suggests potential near-term relief for Indian markets, the convergence of multiple global uncertainties and domestic triggers creates a environment where volatility may persist. Investors will need to balance optimism about potential policy support and trade developments against concerns about foreign capital outflows, global economic headwinds, and geopolitical tensions that continue to shape the investment landscape.