Markets set for muted start; traders eye earnings and global cues

By Business & Economy Desk | SarhindTimes.com
Date: October 8, 2025

Indian equities are likely to open on a muted note this Wednesday, mirroring cautious global sentiment as investors await key Q2 corporate earnings, tariff developments, and policy signals from major economies. The GIFT Nifty index suggested a flat to mildly positive start, reflecting a pause after recent gains in benchmark indices. Traders are watching for sector rotation and earnings-led action rather than broad-based momentum, analysts said.

1. Opening Cues: Calm Before Earnings Storm

The GIFT Nifty, which serves as an early indicator for the domestic market, traded almost unchanged in the pre-market session, hinting at a measured start. This comes after a volatile Wall Street session marked by mixed U.S. data, dovish Federal Reserve commentary, and renewed discussions on trade tariffs.

According to early derivatives positioning, traders are largely expecting a range-bound session, with near-term resistance for the Nifty50 at around 24,900–25,000 levels and support near 24,600.

“Markets are in a consolidation phase before a busy earnings week. We’re likely to see selective moves rather than index-wide rallies,” said Amit Gupta, Head of Derivatives at ICICIdirect. “Investors are focusing on Q2 commentary from banks, FMCG, and auto names.”

2. Global Market Snapshot: Soft Lead From Wall Street

Overnight, U.S. markets ended mixed — the Dow Jones Industrial Average edged lower, while the Nasdaq Composite managed a modest gain as tech shares rebounded. Bond yields softened slightly, offering relief to growth stocks. Meanwhile, Asian peers opened mixed on Wednesday, with Tokyo’s Nikkei slipping amid profit booking, Hong Kong’s Hang Seng gaining on tech optimism, and Shanghai trading flat.

The U.S. dollar index steadied around 105.3, while Brent crude hovered near $82 per barrel, capping recent gains after OPEC reaffirmed stable production. Currency volatility and energy prices continue to be near-term global triggers, especially for emerging-market equities like India.

“Investors are toggling between optimism on growth and concern over rising input costs,” said Rohit Arora, global strategist at Motilal Oswal Financial Services. “Until inflation and energy markets stabilize, traders will prefer defensive positioning.”

3. Domestic Landscape: Macro Data & Liquidity Picture

On the domestic front, India’s macroeconomic indicators remain supportive.

GST collections in September crossed ₹1.72 lakh crore, maintaining a consistent growth trend.
Core sector growth moderated slightly to 7.1%, but still outpaces most peers.
PMI manufacturing stayed above the 55 mark for the 28th consecutive month, indicating sustained expansion.
Foreign exchange reserves climbed above $650 billion, offering a cushion against volatility.

However, rising oil prices and a marginal uptick in CPI inflation (now near 4.9%) could limit RBI’s policy space. Economists expect the Reserve Bank of India to stay on hold in the upcoming policy meet but may adjust liquidity operations to absorb excess system liquidity stemming from government spending and festival demand.

4. Q2 Earnings Season: The Real Catalyst

This week marks the unofficial start of the second-quarter (Q2FY26) results season. Analysts expect steady earnings growth, though margin pressures could surface in sectors hit by raw material cost volatility.

Key sectors to watch:

Banks & NBFCs: Robust loan growth and lower credit costs likely to support profitability.
FMCG: Mixed results expected; rural demand recovery remains patchy.
IT Services: Margins may improve sequentially, but revenue growth likely moderate due to global softness.
Auto: Festive demand optimism and export rebound could aid sales momentum.
Capital Goods & Infra: Continued government spending and private capex revival are strong positives.

“Banks will drive near-term sentiment, but IT and consumption names will determine the medium-term tone,” said Nandita Mehrotra, Equity Research Head at Edelweiss Securities. “Q2 will be about management guidance and margin trajectory more than headline growth.”

5. IPO Calendar: Primary Markets in Spotlight

While the secondary market consolidates, the primary market remains vibrant.
Upcoming listings and issues from Tata Capital, LG Electronics India, and Nova Tech Services have drawn strong retail and institutional participation. Grey market premiums remain robust, signaling investor appetite for quality names even amid market consolidation.

“Liquidity in the IPO market is intact,” said Ravi Jain, an investment banker with Axis Capital. “We’re seeing high-quality paper attract strong bids without draining liquidity from the broader market. This reflects maturity among Indian investors.”

6. Sectoral Rotation: The Search for Stability

Traders are witnessing a sectoral churn:

IT stocks have seen renewed interest ahead of Infosys and TCS earnings.
Banks are steady amid loan growth optimism but cautious on deposit costs.
Energy and metals saw profit-taking after recent rallies.
Consumer discretionary and midcap manufacturing shares are showing relative strength.

“Market behavior is shifting from speculative to earnings-driven,” explained Kunal Shah, Senior Market Analyst at LKP Securities. “We see selective accumulation in quality midcaps with strong balance sheets, while high-beta stocks are being trimmed.”

7. Retail Investors: Avoid Momentum Chasing

Experts urge retail investors to resist FOMO (fear of missing out) and avoid chasing short-term rallies. With valuations near record highs, traders prefer “buying on dips” in fundamentally sound companies.

“Long-term investors should use this phase to accumulate steady compounders in banking, capital goods, and defense,” said Ramesh Damani, veteran investor. “The market is rewarding discipline and punishing leverage.”

Top 3 investing principles for this phase:

Don’t chase penny stocks—stick to businesses with visible earnings.
Track Q2 commentary—guidance is more crucial than reported numbers.
Diversify across sectors—avoid concentration in momentum themes.

8. Technical View: Nifty’s Tightrope Walk

Technicians describe the market’s current structure as a tight coil awaiting breakout triggers.

Support: 24,550–24,600
Resistance: 24,950–25,000
Bank Nifty: support at 53,200; resistance near 53,800

Momentum oscillators remain neutral; analysts advise staggered positions. Put-call ratios show balanced positioning, suggesting traders are not expecting large directional moves.

9. Commodities & Currency Watch

Crude Oil: Brent steady near $82–83/barrel; India’s oil import bill expected to rise slightly.
Gold: Hovering near ₹71,000 per 10g amid global risk-off sentiment.
Rupee: Expected to trade in a 83.05–83.35 range against the U.S. dollar; RBI may intervene to curb sharp depreciation.
Metals: Copper and aluminum prices firmed on Chinese demand hopes.

For export-heavy sectors (IT, pharma, specialty chemicals), currency stability remains crucial.

10. Global Risk Factors: What Could Move Markets

U.S. Inflation Data (due Friday): A hotter print could reignite rate fears.
Middle East Geopolitical Tensions: Any flare-up could push oil prices higher.
China’s Property Sector: Fresh defaults could dampen Asian sentiment.
Global Tech Earnings: Results from Nvidia, Apple, and Amazon will shape risk appetite.

“Even if the Fed is done hiking, we’re not done dealing with the after-effects of tight policy,” observed Sonal Verma, Global Macro Economist at Nomura.

11. Derivatives Data: Options Indicate Neutral Bias

According to NSE data, heavy open interest is seen at 25,000 calls and 24,600 puts, indicating consolidation. The India VIX, a volatility gauge, remains below 13—reflecting low fear but also complacency risk. Traders expect a spike as earnings progress.

12. Institutional Flow: FII vs DII Balancing Act

Foreign institutional investors (FIIs) turned marginal sellers on Tuesday, while domestic institutions (DIIs) absorbed the selling. The cumulative flow remains positive for October.

FIIs: -₹278 crore (provisional)
DIIs: +₹312 crore (provisional)

This counterbalancing has kept markets resilient despite global jitters. Mutual fund SIP flows remain strong, crossing ₹21,000 crore monthly—a new milestone.

13. Outlook: Steady, Not Stagnant

Most analysts agree that the market’s pause is healthy consolidation rather than weakness. With solid domestic fundamentals, strong retail inflows, and corporate earnings resilience, India remains the best-performing large market globally in 2025.

“This is not the time to panic or overtrade. The index is digesting gains. Long-term investors should stay the course,” said Devina Mehta, Chief Strategist at Kotak Institutional Equities.

14. Editor’s Take: Cautious Optimism

India’s bull market continues to rest on three pillars — earnings, liquidity, and confidence. As long as these pillars hold, corrections are opportunities, not threats. However, prudence is key. When valuations stretch, smart investors prefer patience over adrenaline.

The coming weeks will test not just corporate profits but also investor psychology. The real winners will be those who manage risk as effectively as they chase returns.

15. Quick Guide: Investor To-Do List This Week

Track Infosys, TCS, HDFC Bank, and HUL earnings.
Watch U.S. inflation and crude oil trends.
Avoid high leverage; keep stop-losses tight.
Rebalance portfolio toward core sectors—banking, capital goods, infra.
Review midcap exposure; trim frothy counters.

16. Conclusion: A Breather Before the Next Leg Up

Wednesday’s muted open is not the end of the rally—it’s a breather before the next trend.
Markets are poised between caution and conviction. As long as earnings deliver, and policy remains supportive, investors have reason to stay invested—though selectively.

“Volatility will rise, but it’s a price worth paying for long-term compounding,” summed up veteran fund manager Aashish Somaiyaa.

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