Indian equity benchmarks are expected to open higher on Monday after experiencing their worst weekly performance in more than three months, with market sentiment supported by prospects of a U.S. rate cut despite ongoing concerns over trade relations and foreign fund outflows.

Market Opening Indicators

Gift Nifty futures were trading at 25,793 points as of 7:54 a.m. IST, indicating that the Nifty 50 could open above its Friday close of 25,683.30. The positive opening sentiment comes despite significant weekly losses for both major indices.

Weekly Performance and Market Concerns

Both the Nifty 50 and Sensex lost approximately 2.5% each during the previous week, closing lower in all five trading sessions. The decline was primarily attributed to renewed concerns over U.S. tariffs that rattled investor confidence. Market analysts expect volatility to remain elevated, particularly during early trading hours.

"Volatility is expected to remain elevated, particularly during early trade, with any pullback rallies likely to be short-lived," said Ponmudi R, CEO of Enrich Money.

Foreign Investment Outflows

Foreign investors continued their selling pressure, offloading Indian shares worth ₹37.69 billion (approximately $417.63 million) on Friday according to provisional data. The selling trend has intensified in January, with foreign investors having sold $1.30 billion worth of Indian equities so far this month, following record outflows in 2025.

Corporate Earnings Highlights

Several major companies reported their quarterly performance, showing mixed but generally positive results:

Avenue Supermarts, which operates the DMart retail chain, demonstrated strong growth momentum with standalone revenue increasing 13.2% and profit rising 17.6% for the third quarter. Phoenix Mills reported robust retail portfolio consumption growth of 20% in the December quarter, reflecting demand resilience even as select assets continue to undergo planned revamp.

Market Outlook and Key Factors

Asian markets provided some support by rising early in the day, tracking a Wall Street rally from Friday. The U.S. rally was triggered by December employment data showing fewer job additions than expected, which did little to alter expectations of a Federal Reserve rate cut this year. Domestic investors will focus on upcoming earnings announcements and inflation data scheduled for release later in the day for additional economic cues.

Market challenges include an elusive India-U.S. trade deal, heightened geopolitical risks, and ongoing foreign fund outflows that continue to weigh on investor sentiment.

Indian equity markets are poised for a cautious start on Monday, with early indicators suggesting a largely flat opening despite positive cues from Asian markets. Gift Nifty traded at 25,809.50, down approximately 7.50 points or 0.10% from its previous close, reflecting muted sentiment ahead of the trading session.

Friday's session saw benchmark indices extend their losing streak for the fifth consecutive day, with the Sensex declining 605 points or 0.72% to close at 83,576.24, while the Nifty 50 dropped 194 points or 0.75% to settle at 25,683.30. Broader markets faced additional pressure, with the BSE Midcap index falling 0.90% and the Smallcap index declining 1.74%.

Earnings Announcements Drive Market Focus

Several major companies are set to release their Q3 results today, likely to influence trading sentiment and individual stock movements.

These earnings announcements are expected to attract significant investor attention as market participants assess corporate performance amid ongoing global uncertainties.

Major Corporate Developments

NTPC has entered into a shareholder agreement with Maharashtra State Power Generation Company (MAHAGENCO) to acquire STPL in a deal valued at ₹3,800.00 crore, strengthening its position in the thermal power segment.

Mahindra & Mahindra reported strong December business performance, with total sales volumes jumping 27% year-on-year to 85,501 units, accompanied by a 25.40% increase in production levels.

Strong Quarterly Performance Updates

Several companies have already announced their quarterly results, showing mixed but generally positive trends:

IREDA posted particularly impressive results for the quarter ended December 31, 2025, with net profit climbing 37.50% year-on-year. Avenue Supermarts, which operates the DMart retail chain, reported an 18.30% year-on-year rise in consolidated profit after tax for Q3 FY26.

Corporate Actions and Strategic Moves

Several companies are undertaking significant corporate restructuring activities. Spandana Sphoorty Financial announced that its board is considering a proposal to merge subsidiary Criss Financial Ltd with the parent company.

Lemon Tree Hotels is witnessing a major ownership change, with Coastal Cedar Investment BV, a Warburg Pincus affiliate, set to purchase the entire 41.09% equity stake in subsidiary Fleur Hotels from APG Strategic Real Estate Pool NV.

Vedanta received approval from the National Company Law Tribunal (NCLT) in Mumbai for its Scheme of Arrangement involving Vedanta, Vedanta Aluminium, Talwandi Sabo Power, Malco Energy, and Vedanta Iron and Steel.

Market Outlook and Leadership Changes

Reliance Industries Chairman Mukesh Ambani outlined five concrete commitments at the Vibrant Gujarat Regional Conference for the Kutch and Saurashtra regions, highlighting the group's vision for advancing India's clean energy agenda and broader development goals.

Akzo Nobel India Limited announced several changes to its board and senior management following a board of directors meeting held on Friday.

Market analysts expect volatility to remain elevated during early trade, with any pullback rallies likely to be short-lived. The broader market trajectory will be influenced by global developments and upcoming inflation data, which could affect near-term positioning strategies.