Domestic markets are likely to open on a weak note but will remain volatile throughout the day. Global stocks, especially Korea’s Kospi and Nikkei, are volatile and in deep red in early trading on Monday. Kospi, in fact, plunged nearly 10 per cent at one point but has recovered to be currently 7 per cent down.
Gift Nifty at 23,120 signals a gap-down opening of at least 300 points. The Gift Nifty, however, recovered from the day’s low of 23,080 as global markets also displayed some stability at lower levels. Equities across the Asia Pacific region are down 4 per cent to 7 per cent.
According to analysts, SpaceX’s $75 billion IPO is likely to suck liquidity out of the system and that may affect global markets. Foreign Institutional Investors (FIIs) continue to remain net sellers, with persistent outflows acting as a key headwind for Indian equities and limiting the scope for a sustained recovery.
Hariprasad K, SEBI-registered research analyst and founder of Livelong Wealth, said: “From a market perspective, today’s weakness appears to be driven more by global factors than domestic fundamentals. While strong domestic liquidity continues to provide support during corrections, near-term sentiment is likely to remain cautious until stability returns to global markets, crude oil prices, and the technology sector.”
Overall, market sentiment remains cautious to negative in the near term. Escalating tensions between Iran and Israel, rising crude oil prices, continued FII selling, and weak global market performance are likely to keep volatility elevated, said Ponmudi R, CEO of Enrich Money. “Any further deterioration in geopolitical conditions could intensify selling pressure, while signs of de-escalation may provide support for a gradual recovery in risk assets,” he added.
Analysts see selling by foreign institutional investors keeping the market under check.
Dr V K Vijayakumar, chief investment strategist at Geojit Investments Ltd, said: “The total selling in June up to 6th stood at a massive ₹42,926 crore taking the total selling in 2026 so far to ₹2,83,662 crore (NSDL). These are massive unprecedented selling by FPIs.
“Considering the significance of FPI inflows to finance the current account deficit and the Balance of Payments gap, the Central Bank and the government initiated several steps to attract FPI.
However, if FPIs are to invest in India the AI trade which has been the principal driver of FPI outflows away from India should change. There are early signs of this happening. The crash in Nasdaq by about 5 per cent on June 5th is an indication that the AI bubble may burst. If the AI trade cools down and reverses that can trigger reversal of FPI outflows. Therefore, watch out for this trend,” he added.