1. Fed Rate Cut Hopes
US inflation data released on Friday came in lower than expected, reinforcing hopes of a 25-basis-point rate cut at the Federal Reserve’s meeting starting October 28. Markets are also pricing in the possibility of further cuts in December and January, signaling a potential shift toward a more accommodative stance. Such a move typically benefits emerging markets like India by boosting foreign capital inflows and investor risk appetite.
2. Progress in India–US Trade Talks
Reports suggest that India and the US are close to finalizing a trade agreement, boosting investor optimism. However, Commerce Minister Piyush Goyal’s remark that India will not rush into deals with restrictive terms has tempered enthusiasm. A successful agreement could ease the 50% tariffs currently imposed on Indian exports, half of which are in retaliation for Russian oil imports. Trump’s recent comments suggesting that India would significantly reduce its Russian oil imports could also have an impact, if confirmed.
3. Shifts in Crude Oil Dynamics
Crude oil prices surged 5% following new US and EU sanctions on Russian oil majors, stoking concerns over tighter global supply and rising inflation risks. Indian refiners are preparing to cut imports of Russian oil to comply with the sanctions, a move that could help ease trade negotiations with the U.S. but may weigh on India’s import bill and fiscal position.
4. Anticipation of US–China Trade Breakthrough
Markets are optimistic that the upcoming meeting between President Donald Trump and Chinese President Xi Jinping during Trump’s Asia tour could advance a U.S.–China trade deal. Analysts expect the U.S. to adopt a softer stance, given China’s strategic leverage in rare earth minerals and magnets, which are vital to global manufacturing.
5. Focus on Q2 Corporate Earnings
Investors will closely watch second-quarter results, which have so far exceeded expectations. The defence sector will take center stage as Mazagon Dock and Bharat Electronics Ltd (BEL) report results, with focus on government orders and new contracts. The Nifty India Defence Index has already rallied 26% year-to-date in 2025, making it one of the top-performing sectors. Other key companies set to announce results include Kotak Mahindra Bank, PNB Housing, IOC, Coal India, Adani Power, Dabur, DLF, ITC, Manappuram Finance, BHEL, and NTPC.
6. FII Activity
Foreign investor sentiment has shown early signs of stabilizing after months of selling. On October 24, 2025, FIIs turned net buyers of Indian equities worth Rs 621 crore, while DIIs remained net buyers at Rs 173 crore. For the year so far, FIIs have sold shares worth over Rs 2 lakh crore, while DIIs have purchased shares worth over Rs 5 lakh crore, highlighting strong domestic institutional support amid foreign outflows. Any material shift could further bolster sentiment on the bourses.Indian equities pulled back on Friday, with the Sensex and Nifty snapping a six-day winning streak as investors booked profits after benchmarks hovered near record highs. The pause came after a rally driven by optimism over easing global trade tensions and expectations of a rebound in corporate earnings.
The S&P BSE Sensex fell 0.41% to 84,211.88, down 344.52 points, while the NSE Nifty 50 slipped 0.37% to 25,795.15. Financials weighed on the benchmarks, with the Nifty Bank index declining 0.7%. The FMCG gauge fell 0.8%, dragged lower by Hindustan Unilever’s 3.3% drop and a 2.1% slide in Colgate-Palmolive (India) after both companies posted muted September-quarter results.
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