Stock markets will be driven by RBI's interest rate decision, tariff-related developments, global trends and trading activity of foreign investors in this holiday-shortened week, analysts said.
Macroeconomic data announcements, such as industrial production and HSBC PMI manufacturing data, would also be tracked by investors.
Stock markets would remain closed on Thursday for Dussehra and Mahatma Gandhi Jayanti.
"Markets step into a data-heavy week, where both domestic and global cues will dictate momentum. On the domestic front, industrial production data and the RBI’s policy decision will be in focus, along with the expiry of September derivatives contracts, which could add to volatility.
"Globally, updates on the US-India trade deal will be closely tracked," Ajit Mishra – SVP, Research, Religare Broking Ltd, said.
India and the US have decided to continue negotiations for early conclusion of a mutually beneficial bilateral trade agreement, the Commerce Ministry said on Friday.
"At this point, all eyes are on US–India trade relations for a possible relief rally. On the domestic front, the upcoming RBI policy on 1st October is crucial, with the street divided on whether a rate cut will materialize. IIP data and festive season sales updates will also be important triggers," Santosh Meena, Head of Research at Swastika Investmart, said.
Globally, US macro data, dollar index movement, and crude oil prices will drive near-term direction. Above all, FII flows remain the key determinant for market trend, Meena added.
Last week, the BSE benchmark tanked 2,199.77 points or 2.66 per cent and the NSE Nifty dropped 672.35 points or 2.65 per cent.
Vinod Nair, Head of Research, Geojit Investments Limited said, "Indian equities closed the week on a subdued note, with broad-based sectoral declines. The IT index came under early pressure amid concerns over rising H-1B visa costs, compounded by Accenture’s subdued outlook." Sentiment weakened further as fresh US tariffs on pharmaceutical products led to a sharp sell-off in pharma counters. Mid- and small-cap stocks corrected more sharply than large caps, reflecting stress from their stretched valuations.
The rupee continued to weaken, weighed down by ongoing FII outflows and heightened geopolitical risks stemming from US trade actions. In contrast, gold sustained its appeal as a safe-haven asset, supported by global trade tensions, a depreciating rupee, steady central bank purchases, and uncertainty over the Fed’s policy path, Nair said.
Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said, "In terms of macro-economic data, markets will track RBI’s interest rate decision on October 1st, the US consumer confidence data and manufacturing PMI of India, China, and the US."
