Indian markets are anticipated to open flat on Monday amid a mixed and cautious sentiment. The Gift Nifty is currently at 25,915, compared to the Nifty spot price of 25,814.80 for October contracts and 25,952 for November contracts. With Thursday marking the settlement for monthly derivatives contracts on the NSE, volatility is expected. Analysts believe that the mixed corporate results for Q2 thus far indicate that the market is likely to fluctuate within a defined range.
“The markets are set to begin the final week of October with a cautiously optimistic tone,” said Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd. He noted that strong corporate earnings, stable foreign inflows, and improving global sentiment create a positive backdrop. However, he cautioned that geopolitical uncertainties, the scheduled monthly expiry, and the forthcoming US Federal Reserve policy decision may induce short-term volatility.
SBI Securities reported that over 300 companies are slated to release their Q2 FY26 results this week, which is expected to accelerate the earnings season. “The outcomes of the two-day FOMC meeting on October 28-29, along with insights from the Federal Reserve Chair regarding future interest rates and inflation amid an ongoing US government shutdown, will be closely monitored,” they stated.
On a positive note, the slowdown in Foreign Portfolio Investor (FPI) selling is beneficial for the overall market.
FII Flows Turning Positive
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, observed that the decline in FII selling that began in early October continues, with FIIs also acting as buyers on several occasions this month. Total FII sales through exchanges up to October 25 amounted to a modest Rs 3,363 crore, according to the National Securities Depository Limited (NSDL). Additionally, the long-term trend of FIIs investing in the primary market remains strong, with total investments reaching Rs 10,692 crore as of the 25th.
Dr. Vijayakumar noted that investing in the primary market has been a consistent profit source for FIIs, and this trend is anticipated to persist. Factors contributing to this potential shift include the narrowing valuation gap between India and other markets, encouraging FIIs to refrain from further selling; improving earnings growth in India expected to accelerate in FY27; and record high Diwali sales indicating a resilient economy and strong consumption. Furthermore, there are indications of a potential trade deal between India and the US that could significantly enhance market sentiment.
While these elements may incentivize FIIs to become net buyers in the Indian market, they may also resume selling at higher valuations, limiting a sustained market rally.
Sector Focus and Trading Strategy
Mishra recommended that traders adopt a buy-on-dips strategy, focusing on sectors demonstrating consistent accumulation such as automotive, banking, and metals, while being selective with others. “Export-oriented stocks may experience short-term fluctuations in line with global market developments,” he added, advocating for a preference towards large-cap and high-quality mid-cap companies with robust fundamentals, while remaining cautious of potential profit-taking at record highs.
Meanwhile, equities across Asia are showing gains, bolstered by a strong closing on US stocks last week.
Published on October 27, 2025
