Domestic markets are anticipated to open significantly higher on Monday, following a sharp decline in crude oil prices, fueled by optimism about a potential agreement between Iran and the United States. The Gift Nifty at 23,985 suggests that the Nifty might open with gains of around 200 points. Asian stocks also opened strongly higher in early trading on Monday.
Despite this positive sentiment, analysts remain cautious, predicting continued volatility in the markets. Pabitro Mukherjee, Associate Vice President of Research at Bajaj Broking, noted that “overall, global uncertainty and macroeconomic headwinds have led to cautious trading activity across the markets.” He emphasized that future institutional flows are likely to be sensitive to developments surrounding US-Iran tensions and fluctuations in oil prices.
Unabated selling by foreign portfolio investors (FPIs) is expected to place additional pressure on the market. “FPI selling for May up to the 23rd totaled ₹30,374 crore, bringing the total FPI selling in 2026 to ₹2,22,343 crore, exceeding the total sell figure of ₹1,66,283 crore for 2025,” analysts reported.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, highlighted several factors contributing to FPI selling: “Poor earnings growth in India, significantly better earnings growth and outlooks in other markets, high bond yields—particularly in the US—and continuous rupee depreciation, along with fears of further devaluation.” He added that “stabilization of the rupee and improved earnings growth prospects could attract FIIs back to India,” noting that while large-cap stocks are facing selling pressure, FIIs have been buying in small and mid-cap stocks where growth potential appears favorable.
From a macroeconomic perspective, Hariprasad K, a SEBI-registered Research Analyst and Founder of Livelong Wealth, stated that the most immediate relief for domestic markets has stemmed from the stabilization of crude oil prices. “Brent crude has retreated from extreme panic-driven highs and is now hovering around the $106–107 range. For an economy heavily reliant on energy imports, softer oil prices provide meaningful support by easing inflation concerns, lessening pressure on the import bill, and enhancing margin visibility in sectors like paints, aviation, logistics, tyres, and industrials.”
However, the backdrop concerning currency remains a structural issue. Despite the resilience observed in global equities, the Indian rupee continues to trade close to historically weak levels against the US dollar. Persistent currency weakness heightens risks of imported inflation and keeps foreign institutional investors cautious regarding emerging markets like India. Consequently, broader market stability is increasingly dependent on domestic institutional inflows to offset periods of FII-led selling pressure.
Published on May 25, 2026.
