Domestic markets are likely to continue with a negative bias on Monday. There is no change in market sentiment despite a break, as geopolitical tensions continue to escalate. With the Q3 results of three key index weights – , and – coming in below market expectations, analysts expect the market to remain under pressure. Gift Nifty indicates that could lose about 150 points at open on Monday.
“Volatility is likely to stay elevated as Q3 earnings announcements coincide with global macro and geo-political headlines. While steady DII inflows could cushion any declines, the near-term direction will remain highly sensitive to FII flows and external cues,” said Ponmudi R, CEO of Enrich Money.
Optimism from better-than-expected Q3 earnings by select large-cap IT companies was offset by tariff-related uncertainties, geopolitical tensions, and continued foreign fund outflows. Domestic macro data remained mixed, with rising retail and wholesale inflation weighing on overall sentiment, said Ajit Mishra, SVP., Religare Research. The upcoming week is expected to be data-heavy and crucial for short-term market direction, he said adding that participants will initially react to the earnings of key heavyweights such as Reliance Industries, HDFC Bank, and ICICI Bank.
Continuous selling by foreign portfolio investors added pressure on SMID (small and mid-cap stocks).
The total FII selling for January up to 16th stood at ₹22,529 crore. This month FIIs were sellers on all days except one. The underperformance of India vis-a-vis other major markets has continued in early 2026 also. The YTD return from Nifty stands at -1.73, said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
The principal reason for this tepid performance was the poor earnings growth and consequent elevated valuations in India. The continuing suspense over the US-India trade agreement also impacted sentiment.
According to Mishra,, focus will shift to the broader set of Q3 earnings from several large and mid-cap companies across sectors. Key domestic releases include PMI readings for Manufacturing, Services, and Composite. In addition, data on bank loan growth, deposit growth, and foreign exchange reserves will be closely monitored.
On the global front, US macroeconomic data, including GDP growth, inflation trends, jobless claims, and PMI readings, will influence risk sentiment and currency movement. Geopolitical developments and updates on trade negotiations will also remain on investors’ radar, he added.
Meanwhile, equities in Asia-Pacific region send mixed signals. While Japan and Australian markets are down, Chinese and Korean stocks are up in early trade.
Analysts said 2026 will year of stock picks.
HDFC MF Yearbook 2026 in a comprehensive report that analyses the global and Indian economic landscape said “2026 is shaping up as a Goldilocks year for India—where strong growth, falling rates, stable currency, and easing global risks combine to create a fertile backdrop for equities, led by metals, BFSI, capital goods, and defence.