Indian markets are expected to open flat on Monday amid mixed, cautious sentiment. Gift Nifty is ruling at 25,915 against the Nifty spot price of 25,814.80 (October) and 25952 (November) contracts. Thursday being the settlement for monthly derivatives contracts on the NSE, the market will remain volatile. As Q2 corporate results have been mixed so far, analysts expect the market to move in a range.
Markets are likely to begin the final week of October with a cautiously optimistic tone, said Ajit Mishra – SVP, Research, Religare Broking Ltd. Strong corporate earnings, steady foreign inflows, and improving global sentiment offer a constructive backdrop. However, geopolitical uncertainties, scheduled monthly expiry and the upcoming US Fed policy decision could trigger short-term volatility, he added.
SBI Securities, in a note, said the earnings season is expected to gain momentum with over 300 companies scheduled to release their 2QFY26 results this week. “A two-day (28-29 Oct) FOMC meeting outcome and FED Chief’s commentary on future interest rate and inflation outlook amid an ongoing US shutdown will be closely tracked,” it added further.
Meanwhile, the slowdown in FPI selling augurs well for the overall market.
FII flows turning positive
Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said the decline in FII selling, which began in early October, continues. FIIs turned buyers too in many days of October. Total FII selling through exchanges up to October 25 stood at a negligible Rs 3,363 crore. ( NSDL) The long-term trend of FIIs continuously buying/investing through the primary market continued in October, too, with a total investment of Rs 10,692 crores up to the 25th.
“Investing through the primary market has been a steady source of profit for the FIIs and, therefore, this trend is likely to continue.,” he said adding Going forward, there are certain important factors that may lead to FIIs turning buyers in India: One, the valuation differential between India and other markets has declined discouraging further FII selling in India and moving monies to other markets; earnings growth in India is slowly picking up and will gather momentum in FY27; and the Diwali sales this year across large number of goods are an all-time high indicating a resilient economy and robust consumption. Fourth, there are indications of a trade deal between India and the US, which can substantially improve market sentiments.
These factors could turn FIIs into buyers in the Indian market. However, at higher levels, they may again turn sellers, thereby restricting a sustained rally in the market, he believes.
Sector focus and trading strategy
Mishra advised traders to maintain a buy-on-dips approach, focusing on sectors that exhibit consistent accumulation, such as auto, banking, and metals, while remaining selective in others. “Export-oriented stocks may witness short-term swings in line with global developments, he said, adding, “within the broader market, preference should be given to large-cap and high-quality midcap names with robust fundamentals, while being mindful of potential profit-taking near record highs.”
Meanwhile, equities across Asia are ruling in the green, thanks to the strong closing of the US stocks last week.