Indian equity markets are poised for a significantly higher opening on Monday, as trading resumes after the weekend break on a wave of optimism fueled by two key developments: an apparent de-escalation in military tensions between India and Pakistan, and positive signals emerging from US-China trade negotiations.
These factors are expected to overshadow recent caution and potentially reverse last week’s losses.
Early indicators point towards a strong start for Dalal Street.
Gift Nifty futures were trading robustly around the 24,575 mark in early Monday hours, up approximately 480 points, suggesting a potential 2% jump for the Nifty 50 index compared to its Friday close of 24,008.
This sharp anticipated rise reflects investor relief following news of a ceasefire agreement between India and Pakistan.
The agreement came after four days of intense cross-border missile and drone strikes targeting military positions, which had significantly unnerved the markets last week.
Adding to this positive domestic development, reassuring news emanated from high-level trade talks between the United States and China held in Switzerland over the weekend.
Both economic superpowers signaled they had reached an “important consensus,” boosting hopes for an easing of global trade friction.
This news propelled US stock futures nearly 400 points higher and was mirrored by gains across other major Asian markets, including Japan, South Korea, and Australia, indicating widespread investor optimism about potential de-escalation and renewed economic cooperation.
Reversing last week’s caution
The anticipated positive opening stands in stark contrast to the market sentiment seen last week.
Rising military tensions between India and Pakistan had triggered a sharp fall on Dalal Street, with the Nifty 50 index dropping nearly 1.5% over just three trading sessions by Friday as investors grew increasingly cautious.
While a fragile ceasefire was reportedly holding over the weekend despite some fresh exchanges of fire on Saturday night, the situation remained tense.
Indian authorities maintained a cautious stance, reportedly sending a hotline message to Pakistan on Sunday warning against further ceasefire violations, though the Pakistani army denied any breach.
FPI flows and market outlook
Another factor investors will be watching closely is foreign portfolio investor (FPI) activity.
On Friday, FPIs turned net sellers for the first time in seventeen sessions, offloading shares worth Rs 3,798.71 crore, according to provisional exchange data.
The return of calmer geopolitical conditions, coupled with positive global trade news, could potentially see FPIs resume their buying interest.
Market analysts suggest that while the immediate geopolitical risk has eased, the underlying global economic environment and ongoing corporate earnings season will continue to influence market direction.
Positive developments on the US-China trade front are seen as particularly crucial for sustaining broader market optimism.
Currency and commodity watch
In the currency markets, the Indian rupee has shown resilience, holding steady within the Rs 84–85 range against the US dollar, despite broader concerns about tariffs and global trade.
This stability is partly attributed to growing international interest in engaging commercially with India, driven by its large domestic market and expanding manufacturing potential.
Meanwhile, commodity prices, particularly crude oil and zinc, remain firm, potentially supporting a “buy-on-dips” strategy for investors focused on these sectors.
As trading commences, the interplay between the relief from de-escalating local tensions, optimism on the global trade front, and ongoing corporate earnings will shape the market’s trajectory.
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