Indian equities enter a crucial week as investors weigh global risks, foreign flows, sector rotation and the impact of recent market changes.
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Indian equity markets are likely to open on a flat to negative note on Monday, the first week after the introduction of the closing auction session, which confused both traders and investors. Gift Nifty at 24,667 signals a flattish opening for Indian markets, as Nifty August futures on Friday closed at 24,655.Closing auction session in focusThe rollout of the NSE’s Closing Auction Session (CAS) for F&O stocks was the week’s key market development. Effective August 3, 2026, continuous trading in F&O stocks ends at 3:15 pm, followed by the closing auction session, while derivatives trading continues until 3:40 pm. “Although the new framework aims to improve price discovery and reduce end-of-day volatility, its initial implementation triggered sharp price swings during the closing minutes of trade, particularly in the first three sessions,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.Meanwhile, major equities across Asia-Pacific region are up between 0.5 per cent and 2 per cent in early deal on Monday, sending positive signals to Indian markets.According to Ponmudi R, CEO - Enrich Money, Sentiment remained broadly constructive last week, underpinned by resilient corporate earnings, selective sectoral buying, and ample domestic liquidity. At the same time, geopolitical developments in the Middle East and continued uncertainty surrounding the Strait of Hormuz remained the principal external risks, prompting investors to stay selective rather than aggressively increase risk exposure. Renewed foreign institutional inflows further reinforced confidence in domestic equities and helped the market absorb bouts of volatility.Hitesh Tailor, Research Analyst, Choice Broking, said Sector-wise, market performance remained mixed, with buying interest largely concentrated in a few sectors. Nifty Auto, Nifty IT, Nifty Metal and Nifty PSU Bank emerged as the strongest performers, supported by sustained buying momentum and improving investor sentiment. On the other hand, Nifty Private Bank, Nifty Realty and Nifty Financial Services witnessed profit booking and underperformed the broader market, reflecting a cautious undertone in financial and real estate stocks. Overall, sectoral rotation remained evident, with investors favouring cyclical and technology-driven sectors over rate-sensitive segments.Middle East, US inflation report to drive marketsThe coming week is likely to be shaped by two dominant themes: developments in the Middle East and the July U.S. inflation report. “While Indian equities continue to benefit from resilient corporate earnings, improving foreign institutional flows, and supportive domestic liquidity, investors are likely to remain cautious as geopolitical uncertainty and evolving expectations for U.S. monetary policy continue to influence global risk appetite,” Ponmudi said.“Attention will remain firmly focused on the Middle East, where negotiations over the Strait of Hormuz remain fluid. Although recent diplomatic engagement has raised hopes of a gradual normalization of shipping through the strategic waterway, the absence of a comprehensive agreement means the geopolitical risk premium has yet to disappear. Until there is greater clarity, investors are likely to remain selective, with periodic bouts of profit-taking expected whenever uncertainty resurfaces,” he added.Welcome back FPIsThe trend of FPIs turning buyers in India, which was pronounced in July, has continued so far in August as well. Till August 7, FPIs bought equities worth ₹12,920 crore, of which ₹8,195 crores was through exchanges and ₹4,125 crores was through the ‘primary market and others’ category.Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, saidGiven the improving prospects for GDP and earnings growth in India, FPIs are likely to continue buying in India. But this is only likely to become a major trend, since U.S. bond yields (the 10-year is at 4.67%) are high. This has the potential to attract a lot of funds to the safe U.S. bond markets.”However, according to Kruti Shah, Quant Analyst at Equirus Securities, Flows remain constructive, although conviction remains selective. “Sectoral leadership continues to rotate, with PSU Banks, Defence, Metals and Autos witnessing short covering and delivery-based buying, while Realty, FMCG, and Healthcare remain under pressure amid profit booking and cash selling,” she said adding Globally, softer crude prices, resilient US equities and firm precious/base metals remain supportive of risk sentiment, although a rebound in the DXY warrants monitoring. Overall, liquidity remains constructive, but a sustained breakout will likely require broader market participation and earnings-led conviction rather than positioning alone.Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a SEBI-registered Research Analyst firm, said, Indian equities are expected to begin the week on a constructive note, supported by a combination of improving global liquidity expectations and resilient domestic fundamentals. Softer-than-expected U.S. employment data has strengthened the case for a less restrictive Federal Reserve, improving risk appetite across global financial markets and encouraging flows into emerging-market assets. At home, the return of foreign institutional investors, sustained buying by domestic institutions and another healthy quarter of corporate earnings have reinforced confidence in the durability of India’s growth story.Published on August 10, 2026
