Indian equity markets are expected to open Friday’s session on a cautious and subdued note, with sentiment weighed down by a combination of global risk aversion and recent domestic weakness. After a sharp sell-off in the previous session, investors are likely to remain defensive, focusing on capital preservation rather than aggressive risk-taking as uncertainty continues to dominate global markets.
Overnight cues from international markets point to a fragile risk environment. Rising geopolitical tensions, particularly in West Asia, have pushed crude oil prices higher, reviving concerns over inflation and India’s external balances. For a large oil-importing economy, sustained firmness in crude adds pressure on the rupee, corporate margins and the broader macro outlook, prompting investors to pare exposure to equities. Global equity markets have also shown signs of fatigue, with volatility creeping up and safe-haven assets attracting renewed interest.
Domestically, the tone remains cautious following Thursday’s broad-based correction, which saw heavy selling across index heavyweights and cyclical sectors. The recent decline has dented short-term technical indicators, and market participants are increasingly wary of further downside if key support levels fail to hold. While long-term fundamentals are largely intact, the near-term narrative has shifted towards consolidation and correction after a prolonged rally earlier in the year.
“Markets are poised for a cautious to mildly weak opening , following yesterday’s sharp 1.41% decline that erased recent gains and wiped out nearly Rs 6.79 lakh crore in market capitalisation” said senior equity analyst and CEO at broking and wealth tech firm Enrich Money.
Foreign institutional investors have continued to trim positions amid global uncertainty, adding to pressure on benchmark indices. Domestic institutional flows have provided some cushion, but not enough to fully offset the selling momentum. This imbalance suggests that markets may struggle to stage a meaningful rebound in the absence of a clear positive trigger.
Sectorally, interest is likely to remain selective. Export-oriented stocks may see mixed action as currency movements offer limited support, while oil-sensitive sectors could stay under pressure if crude prices remain elevated. Banking and financial stocks, which have borne the brunt of recent selling, may attempt a tentative stabilisation, though sustained buying interest appears unlikely in the immediate term. Stock-specific movements driven by earnings updates, management commentary and corporate actions are expected to dominate trading.
Investors are likely to closely track developments in global geopolitics, crude oil prices and institutional flows for cues on near-term direction. Until clarity emerges on these fronts, markets may remain volatile, with any intraday rebounds attracting selling pressure rather than fresh positional buying.