Will Indian equity markets extend their winning streak for 4th week? Earnings, FII trends, and global cues in focus

Indian equity markets are expected to begin the new week on an optimistic note, extending the winning streak seen over the past three weeks. Cooling inflation, robust domestic demand, and strong corporate earnings have laid a firm foundation for continued gains, though global trade tensions and geopolitical developments may introduce near-term volatility.

The market participants will monitor the ongoing Q2 FY26 earnings season closely, as results from heavyweights like Reliance Industries, HDFC Bank, ICICI Bank, UltraTech Cement, InduInd Bank will set the tone for broader market direction.

“Markets have demonstrated resilience amid macro and global uncertainties. Domestic factors such as easing retail inflation, sustained foreign inflows, and robust corporate earnings provide a constructive backdrop,” said Ajit Mishra, SVP, Research, Religare Broking.

He said that the upcoming truncated trading week will be event-heavy, with several key triggers lined up for investors. “Market participants will first react to quarterly earnings from heavyweights such as Reliance Industries, HDFC Bank, and ICICI Bank, which are likely to set the tone for the broader market.”

On October 21, the one-hour Diwali Special Muhurat Trading session, marking the beginning of Samvat 2082, will be closely watched for sentiment cues and festive cheer, with strong retail and institutional participation anticipated, Mishra added.

Sensex, Nifty hit 52-week high on sustained rally

On Friday, Indian benchmark indices BSE Sensex and NSE Nifty touched their 52-week highs of 84,172.24 and 25,781.50, respectively, during the day, driven by sustained rally for the past three sessions.

For the week, both key indices registered their winning streak for the third consecutive week, with the Nifty surging 1.68% to close at 25,709.85 and the Sensex advancing 1,451.37 points or 1.76% to end at 83,952.19. This was driven by strong domestic cues and positive global sentiment.

While the tone remained subdued in the initial sessions due to renewed trade tensions between the U.S. and China, sustained institutional buying and better-than-expected corporate earnings lifted the benchmarks as the week progressed.

Key Market Drivers

Encouraging macro indicators

The market sentiment was improved by a series of encouraging macroeconomic indicators. Retail inflation (CPI) eased to 1.54% in September 2025 from 2.07% in August, aided by a favourable base effect and softer prices of food, fuel, and household essentials. Wholesale inflation (WPI) too moderated to 0.13% in September, reflecting broad-based price cooling across key commodities, said Mishra of Religare Broking.

Steady foreign inflows

The steady foreign fund inflows and sustained domestic demand, and resilience in the rupee further boosted sentiments. The data showed that foreign institutional investors (FIIs) have substantially reduced their selling and have even turned buyers in some days. 

Till October 17, FII selling has drastically reduced to only ₹4,114 crore. “The principal reason for this change in FII strategy is the reduced valuation differential between India and other markets. India’s underperformance during the last one year has opened up prospects for better performance, going forward,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

“Also, the prospects of earnings growth in response to fiscal and monetary reforms have improved. High frequency data indicate brisk sales of automobiles and consumer durables during the festive season,” he added.

Strategy Ahead

Analyst at Religare Broking said that the robust domestic macro fundamentals and strong earnings momentum offer a constructive setup for the medium term. However, investors should stay vigilant to external risks, including global trade tensions and geopolitical developments, which could lead to short-term volatility.

Traders may continue to adopt a buy-on-dips approach, with a focus on sectors demonstrating consistent earnings visibility—particularly banking, FMCG, and consumer durables. IT and export-oriented stocks may remain volatile amid global uncertainty. Within the broader market, preference should be given to fundamentally sound large and midcap stocks over smallcaps for long trades, Mishra said.

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