MUMBAI: India’s equity market is expected to remain volatile in the coming week over changing global cues related to uncertainty surrounding trade and tariff discussions, and foreign institutional investors (FII) restarting their selling streak. The markets ended lower for the second consecutive week despite optimism surrounding progress in India-US trade talks as mixed Q2 earnings, along with FII exodus and negative global cues hampered sentiments.
The two benchmark indices – BSE Sensex and NSE Nifty - declined by over 0.80%, with the Sensex closing at 83,216.28 and the Nifty settling at 25,492.30. Among the broader indices, the Midcap index ended flat, while the Smallcap index declined 1.7%, indicating profit booking in the broader space.
“Markets are likely to remain volatile in the near term amid global uncertainties and a heavy flow of economic and earnings data. While short-term sentiment could stay cautious due to persistent FII outflows and uneven earnings, improving domestic macro indicators and steady corporate performance may provide underlying support,” said Ajit Mishra – SVP, Research, Religare Broking.
He added that traders should maintain a stock-specific approach, focusing on sectors such as banking (especially PSU banks), auto, and select metal counters, which continue to show relative strength.
“Maintaining a few hedged short positions against long trades may also be prudent, considering recent weakness in select stocks post-earnings. Investors, on the other hand, should continue to focus on earnings quality and realign their portfolios based on company fundamentals and long-term growth prospects,” stated Mishra.
The upcoming week has several key macroeconomic data releases scheduled. On the domestic front, focus will be on India’s CPI inflation and WPI inflation data, which will provide insights into the inflation trajectory and policy outlook. Globally, traders will monitor the performance of AI-related stocks and developments around global trade deals, both of which are expected to influence market sentiment.
On the earnings front, quarterly results from prominent companies such as Bajaj Finance, ONGC, Bajaj Finserv, Biocon, Ashok Leyland, Asian Paints, Tata Steel, BPCL, Marico, and Oil India will be closely tracked for sectoral cues.
While October witnessed net FII buying of Rs 3,902 crores, November has started with FIIs turning sellers on every trading day, so far. The net FII sell figure through exchanges in November up to 8th, stood at Rs 13,367 crores.
“This takes the total FII sell figure for 2025, so far, to a massive Rs 207568 crores. This largely explains the underperformance of India, relative to other major markets this year. It is important to understand a significant feature of the FII activity this year. FIIs, particularly the hedge funds, are selling in India and buying in other markets which are driven by AI trade. US, China, South Korea and Taiwan are regarded as AI winners while India is widely regarded as an AI loser,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
He added that the problem, however, is that AI valuations have reached elevated levels and further rallies from here run the risk of a bubble burst. “This realisation is dawning on investors widely now. This may restrain sustained FII selling in India,” stated Vijayakumar.