Domestic markets are likely to open flat to positive note on Tuesday despite continuous selling by FPIs and other global headwinds such as inflation, war etc. Analysts expect the market to remain volatile and may see selling pressure on every rise.
With the inflation rising sharply, analysts expect equities, especially from FMCG and automobile sectors to come under renewed pressure.
Aditi Nayar, Chief Economist, ICRA Ltd. on the CPI data, said With the CPI inflation jumping to a slightly higher than forecast 5.5% in September 2026 and appearing set to cross 6% in the ongoing month, the MPC’s recent rate hike appears prescient. “While the monsoon has turned out to be fairly dismal, with inadequate replenishment of reservoirs clouding the outlook for rabi sowing, another rate hike in December seems quite certain. Crude oil prices currently remain elevated, and their trajectory will keenly influence the likelihood and extent of further rate tightening in 2027,” said.
Meanwhile, Gift Nifty at 22413 indicates a moderate gain at open.
Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, Indian equities are likely to open modestly higher, with GIFT Nifty pointing to a positive start. However, sustaining the gains could prove difficult as accelerating domestic inflation, a rebound in crude prices and persistent foreign selling continue to weigh on the outlook.
“September retail inflation rose to 5.54% from 4.83% in August, driven in part by a sharp increase in food inflation to 7.74%. The rise in inflation adds to the challenge facing the RBI following its recent shift towards a calibrated tightening stance. If food and energy prices remain elevated, persistent price pressures could strengthen the case for further monetary tightening and keep borrowing costs higher for longer. This could weigh on rate-sensitive sectors such as banking, automobiles and real estate, while rising household expenses risk curbing discretionary consumption,” he said.
Brent crude rebounded to around $106.65 a barrel as doubts over a proposed Russia–Ukraine energy ceasefire and renewed supply concerns in the Middle East revived the geopolitical risk premium. The rebound suggests that the recent pullback was driven partly by expectations of easing tensions rather than a lasting improvement in supply conditions. With crude back above $105 and domestic inflation accelerating, higher energy costs threaten to compound inflationary pressures and cloud the outlook for corporate margins.
“Geopolitical risks remain another source of uncertainty. Weekend optimism over a Russia–Ukraine energy truce faded after reports of continued attacks on energy infrastructure, while unresolved tensions around Gulf energy facilities kept supply concerns alive. Any fresh escalation could push crude higher, adding to the inflation burden and limiting the scope for a durable recovery in Indian equities,” he further said.
Ponmudi R, CEO of Enrich Money, said Indian equities are likely to remain volatile and cautious as elevated crude oil prices, mounting inflation concerns and escalating geopolitical tensions weigh on investor sentiment. “Meanwhile, the Q2 FY27 earnings season is gathering pace, with quarterly results expected to drive stock-specific activity. Investors will focus on revenue growth, profit margins, management commentary and forward guidance, making corporate performance an important determinant of sectoral trends and broader market direction,” he said.
Global cues remain weak, with Asian markets falling in early trade amid losses in U.S. semiconductor stocks and concerns over the technology sector. Japan’s Nikkei 225 is down more than 2%, while South Korea’s KOSPI has fallen over 4%, reinforcing the cautious tone across regional markets.