Domestic markets are likely to open strongly higher on Monday as crude oil prices fell sharply on hopeful that Iran and US sign deal is likely to happen soon. Gift Nifty at 23,985 signals that Nifty may open with gains of 200 points. Asian stocks opened sharply higher in early deal on Monday.
However, analysts are still cautious and feel market will remain volatile despite positive sentiment.
Pabitro Mukherjee, Associate Vice President- Research, Bajaj Broking, said: “Overall, global uncertainty and macroeconomic headwinds led to cautious trading activity across the markets. Looking ahead, institutional flows are likely to remain sensitive to developments around US–Iran tensions, oil-price movement.”.
Unabated heavy selling by foreign portfolio investors (FPIs) will keep market under pressure, they added.
“FPI selling for May up to 23rd stood at ₹30,374 crore taking the total FPI selling in 2026, so far, to ₹2,22,343 crore. This is higher than the total sell figure of ₹1,66,283 crore for 2025.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said Poor earnings growth in India, Much better earnings growth and prospects for earnings growth in other markets, High bond yields, particularly in the US and Continuous rupee depreciation and fears of further depreciation are the major reasons for FPI selling. “Stabilisation of the rupee and improvement in the prospects of earnings growth can bring FIIs back to India. FII action indicates this. Even while selling largecaps they have been buying in SMIDs where growth and earnings prospects are good. This means earnings is the primary factor.”
According to Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, from a macroeconomic perspective, the most immediate relief for domestic markets has come from the stabilisation in crude oil prices. “Brent crude has cooled from extreme panic-driven highs and is now hovering closer to the $106–107 range. For an economy heavily dependent on energy imports, softer oil prices provide meaningful support by easing inflation concerns, reducing pressure on the import bill and improving margin visibility across sectors such as paints, aviation, logistics, tyres and industrials.”
However, the currency backdrop continues to remain a structural concern. Despite resilience in global equities, the Indian rupee continues to trade near historically weak levels against the U.S. dollar. Persistent currency weakness not only heightens imported inflation risks but also keeps foreign institutional investors cautious towards emerging markets such as India. As a result, broader market stability continues to rely significantly on domestic institutional inflows absorbing periods of FII-led selling pressure.