Indian stock markets snap 8-week losing streak

Nifty outlook next week (AI-generated image for representational purposes)AI Quick ReadIndian equity markets ended their eight-week losing streak, the longest in 25 years, after a volatile week in which benchmarks recovered on buying in information technology (IT), fast-moving consumer goods (FMCG), automobile and financial stocks. However, persistent foreign fund outflows, elevated crude oil prices, rising global bond yields and uncertainty over the monetary policy outlook continued to weigh on investor sentiment.

For the week, the BSE Sensex gained 562.63 points, or 0.78%, to close at 72,472.33, while the Nifty 50 advanced 98.5 points, or 0.43%, to settle at 22,520.45.

The recovery gathered momentum on Friday, October 9, when the Sensex surged 879.09 points, or 1.23%, to 72,472.33. The Nifty 50 climbed 288.65 points, or 1.30%, to end at 22,520.45, snapping the benchmarks' eight-week losing streak.

"Markets snapped an eight-week losing streak, posting modest weekly gains as easing crude oil prices and positive corporate updates supported a late-week recovery. However, volatility remained elevated following the RBI’s decision to raise the repo rate by 25 basis points to 5.50% and shift its policy stance towards calibrated tightening," said Ajit Mishra, SVP – Research, Religare Broking.

Despite the rebound, market participants will look for stronger follow-through buying to determine whether the recovery can extend into the coming week. Several domestic and global developments, including inflation data, corporate earnings, crude oil prices and foreign investor flows, are likely to influence the market's direction.

Inflation data from the US will be a key trigger for global equity markets next week. US consumer inflation, core inflation, producer price inflation (PPI) and retail-sales figures will offer fresh cues on the health of the economy and the likely trajectory of the Federal Reserve's monetary policy.

Stronger-than-expected inflation readings could keep US Treasury yields and the dollar elevated, potentially putting pressure on emerging-market equities.

Crude oil remains one of the most important macroeconomic variables for Indian equities because of its implications for the country's import bill, inflation, corporate margins and currency.

Brent crude was trading above $100 a barrel, while West Texas Intermediate (WTI) was above $90, according to the market assessment provided. Uncertainty surrounding Iran, the Strait of Hormuz and regional energy infrastructure has also raised concerns about possible supply disruptions.

A sustained increase in crude oil prices could put pressure on India's external balance and the rupee, while raising input and transportation costs for companies. This could complicate the inflation outlook and affect expectations around interest rates.

Investors will also track September consumer price inflation (CPI) and wholesale price inflation (WPI) data in India for indications of domestic price pressures and their implications for monetary policy.

Foreign institutional investors (FIIs) remained net sellers for the seventh consecutive week, offloading equities worth ₹30,294.29 crore. Domestic institutional investors (DIIs), meanwhile, purchased equities worth ₹30,313.48 crore during the week, providing a cushion against overseas selling.

Persistent FII outflows remain an overhang for the market, particularly if global bond yields stay elevated or the dollar strengthens. At the same time, continued domestic institutional buying could help absorb some of the selling pressure and limit further declines.

Currency movements will remain important as well. The Indian rupee depreciated by 41 paise during the week ended October 9 to close at 96.73 against the US dollar, compared with 96.32 on October 1. It traded in a range of 96.22–96.85 during the week, moving closer to its all-time low of 96.96.

Continued rupee weakness could add to imported inflation and influence foreign investor sentiment.