Indian equity markets extended their losing streak for the fourth consecutive session on Thursday, with benchmark indices falling below key psychological levels amid negative global cues. The sustained selling pressure reflected investor concerns over weak US economic data and escalating geopolitical tensions that weighed on market sentiment across Asian markets.

Market Performance Overview

The benchmark indices witnessed significant declines during Thursday's trading session. The following table summarizes the key market movements:

The Nifty 50's decline pushed the index below the psychologically important 26,000 level, while the Sensex fell by over 400 points. The broader market segments experienced even steeper losses, with the Nifty Midcap 100 falling 1.50% and the Smallcap 250 index declining 1.33%, indicating widespread selling pressure across market capitalizations.

Volatility and Market Sentiment

Market volatility surged during the session, with the volatility index VIX rising over 6% on Thursday. This sharp increase in the VIX reflects heightened uncertainty and fear among market participants, suggesting that investors are bracing for continued market turbulence in the near term.

Global Market Influence

Asian equity markets provided negative cues to Indian markets, extending their decline for the second consecutive session. The regional market weakness stemmed from disappointing US economic data and rising geopolitical tensions that dampened investor confidence across the region.

The weakness in Asian markets was compounded by negative sentiment in US futures markets. Despite hitting multiple highs earlier in the week, US stock futures traded lower, with S&P 500 futures declining 0.2% and Euro Stoxx futures falling 0.1%. This global market weakness created a challenging environment for Indian equities, contributing to the sustained selling pressure.

Market Outlook

The fourth consecutive session of losses highlights the fragile nature of current market sentiment, with investors closely monitoring global developments for further direction. The combination of weak US economic indicators and geopolitical uncertainties continues to weigh on market confidence, leading to broad-based selling across various market segments and increased volatility levels.

Indian equity markets are bracing for a challenging opening on Thursday, with analysts expecting weakness despite encouraging economic growth projections. The Statistics Ministry's advance estimate of 7.4% real GDP growth for FY26 has failed to lift market sentiment, as global headwinds and domestic concerns continue to weigh on investor confidence.

Market Opening and Sentiment

The Gift Nifty trading at 26,190 indicates a gap-down opening of approximately 50 points for the Nifty. Market sentiment remains cautious as both the Nifty and Bank Nifty hold key support levels while encountering stiff overhead resistance.

Ponmudi R, CEO of Enrich Money, highlighted the challenging environment: "With both the Nifty and Bank Nifty holding key support levels but encountering stiff overhead resistance, market sentiment remains cautious amid elevated geopolitical tensions, renewed tariff-related concerns, and continued foreign portfolio outflows."

Economic Growth Projections

Despite market weakness, India's economic fundamentals show promise. The Statistics Ministry has projected strong growth metrics for the upcoming fiscal year:

The growth acceleration is attributed to strong performances by the services sector and manufacturing. Rajani Sinha, Chief Economist at CareEdge Ratings, noted that the 7.4% GDP growth estimate aligns with expectations, supported by favorable factors including GST rationalization, lower income tax burden, low inflation, interest rate cuts, and strong rural demand.

Market Outlook and Earnings Focus

Trading activity is expected to remain selective, with market participants shifting focus to stock-specific opportunities rather than broad-based positioning. The December-quarter earnings season, beginning next week with results from index heavyweights, will be crucial for near-term market direction.

Emkay Global Financial projects a recovery scenario, expecting FY27 Nifty EPS to bounce back to 14% growth, accompanied by broad-based earnings recovery. Their key investment themes include autos, internet/new age businesses, and small and mid-cap lenders.

Derivatives and Global Context

The derivatives landscape reflects the prevailing sideways bias. Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities, observed that call writers have added fresh positions at-the-money and nearby strikes, effectively capping near-term upside. The Put-Call Ratio has slipped to 0.73, indicating heightened caution and increased seller presence at higher levels.

Asia-Pacific markets present mixed signals, with Japan, China, and Hong Kong markets trading weak, while Korea's Kospi has surged. This mixed regional performance adds to the uncertainty surrounding domestic market direction.

Fiscal and Monetary Policy Implications

Despite nominal GDP growth estimated at 8% for FY26, economists believe the government will manage to meet the fiscal deficit target of 4.4% of GDP. Support comes from higher dividend transfers by the RBI and controlled revenue expenditure, while capital expenditure remains robust.

With healthy GDP growth projections, analysts expect the Monetary Policy Committee to pause on further rate cuts in the next meeting, preserving policy space for future action only if growth outlook deteriorates amid the turbulent global landscape.