Indian markets, after a long break, are likely to open on a weak note on Monday amid mixed signals. Gift Nifty at 22,620 (7:30 am IST) signals a gap-down opening of about 150 points, even as Asian stocks are staying positive in early deals. Analysts said that, besides geopolitical tensions, the focus has shifted to the RBI’s monetary policy meet (April 6-8), and its pronouncements on the country’s economy are being more closely watched this time around.
Policy outlook in focus
ICRA expects the Monetary Policy Committee (MPC) to maintain an extended pause on policy rates through FY2027, notwithstanding the anticipated moderation in growth, given the projected uptrend in CPI inflation and persistent upside risks.
Assuming an average crude oil price of $85/bbl, with no pass-through to RSPs, ICRA pegs the WPI at 3.5% and the CPI at 4.3% in FY2027, with risks tilted to the upside. Given the projected uptrend in CPI inflation, ICRA expects an extended pause on the policy rates throughout the fiscal in spite of the anticipated slowdown in growth, although the RBI would continue to intervene on the liquidity front.
FPI outflows weigh on sentiment
Foreign portfolio investors offloaded shares worth Rs 1.22 lakh crore in March, which, according to VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, is the largest-ever monthly selling by FPIs.
Ajit Mishra – SVP, Research, Religare Broking Ltd, said
Global cues dominate market direction
Global developments continued to dictate market direction, particularly the evolving US-Iran conflict, which kept crude oil prices volatile and elevated. This, in turn, raised concerns over inflation and fiscal stability for import-dependent economies like India.
On the domestic front, macroeconomic indicators presented a mixed picture. Industrial activity improved, with IIP growth rising to 5.2% in February from 4.8% in January, supported by stronger manufacturing output. However, high-frequency indicators signalled moderation, as the HSBC Manufacturing PMI eased to 53.9 in March from 56.9 in February, marking the slowest expansion in nearly four years due to cost pressures and softer demand.
“Persistent FII outflows, despite a temporary recovery in the rupee against the US dollar following RBI measures to curb speculative activity, further weighed on markets and kept investor sentiment cautious despite intermittent recoveries,” he cautioned.
Hariprasad K, SEBI-registered Research Analyst and Founder of Livelong Wealth, said Asian cues remain mildly supportive, with Japan and South Korea trading higher, though broader participation is limited due to regional holidays. However, the underlying tone remains cautious after fresh geopolitical rhetoric over the weekend. Comments from US President Donald Trump, indicating potential escalation if key supply routes are not restored, have kept risk appetite in check. This continues to keep crude oil and global uncertainty as dominant drivers for markets.
Volatility remains elevated
Volatility remains a key concern. India VIX remains elevated above 25, indicating that fear and uncertainty have not fully subsided. Such levels tend to distort risk-reward dynamics, especially in derivatives, where higher premiums make aggressive positioning less favourable. In this environment, a more calibrated
According to Ponmudi R, CEO of Enrich Money, from a broader perspective, markets are currently trading more on global triggers than domestic strength, and until there is clarity on geopolitical developments and a cooling in crude oil prices, volatility is likely to remain high with sentiment-driven moves dominating the trend.
However, analysts expect value buying in some quarters at lower levels.