Indian equity markets witnessed sustained selling pressure during the shortened trading week, with benchmark indices declining across sessions. The Sensex fell 2.69% to close at 71,909.70, while the Nifty declined 3.11% to 22,421.95. The weakness reflected cautious investor sentiment amid elevated US Treasury yields, persistent inflation concerns, higher energy prices and uncertainty surrounding global monetary policy. Selling intensified on Monday and Thursday, with the Sensex declining 1.52% and 0.79%, respectively, while the Nifty fell 1.56% and 0.88% on those days. Domestic economic indicators, however, continued to show resilience. Industrial production growth accelerated to 8% in August, supported by manufacturing output growth of 9% and stronger electricity and gas supply. Bank credit also expanded across agriculture, industry and services, while net FDI inflows reached a five-year high in July. These indicators provide evidence of domestic activity and investment momentum, although external risks remain relevant for market sentiment. Going forward, the direction of crude oil prices, US bond yields and foreign institutional flows will remain important factors influencing near-term market performance.
Global markets remained sensitive to rising bond yields, inflation and changing expectations for US monetary policy. The US 10-year Treasury yield climbed to 5.293%, its highest level since June 2007, while the 30-year yield reached 5.6206%, its highest since June 2002. Higher yields raised concerns about financing costs and equity valuations, although US equities recovered on Friday following weaker-than-expected employment data. The US economy added just 29,000 jobs in September, below the consensus expectation of 84,000, while unemployment increased to 4.2% from 4.1%. Job openings also declined by 256,000 to 7.079 million in August, and consumer confidence fell to 81.9 in September, its lowest level since 2014. These figures added to uncertainty over the balance between inflation risks and labour-market conditions. On Friday, the Dow gained around 0.5%, the S&P 500 advanced approximately 0.7%, and the Nasdaq rose 1.2%. Technology shares supported the recovery, while the possibility of the Federal Reserve holding rates steady in October helped sentiment. Nevertheless, the weekly performance remained mixed, with the Dow down around 1.3%, the S&P 500 little changed and the Nasdaq up 0.5%. In Asia, Japan’s Nikkei benefited from easing oil prices and some stabilization in bond markets, while Australia’s market remained cautious ahead of its central bank decision. Global investor sentiment continues to depend on inflation readings, central-bank communication, energy prices and developments in international trade.
India’s industrial production growth accelerated to 8% year-on-year in August 2026 from 7.4% in July. Manufacturing output rose 9%, while electricity and gas supply growth increased to 12.3%. Mining and quarrying remained weak, contracting 5.6%. The industrial data indicate stronger output in key sectors, although the weakness in mining highlights an uneven sectoral recovery. Banking-sector indicators also showed continued credit expansion. Non-food bank credit grew 18.8% year-on-year as of the fortnight ended 31 August. Credit to services increased 24.3%, industry expanded 18.2%, and agriculture and allied activities grew 17.2%. Personal loans recorded 16.9% growth, supported by continued expansion in housing and vehicle loans. Meanwhile, the RBI reported a marginal decline in lending rates on outstanding loans and fresh term deposits. The government’s export target of US$1 trillion in goods and services, alongside expanding India-UAE cooperation, provides additional context for the medium-term trade and investment outlook.
Crude oil remained a key variable for global markets, with geopolitical developments and supply concerns contributing to price volatility. Brent crude settled at approximately US$102.25 per barrel on Friday, while WTI closed around US$91.11. Prices eased as the G7 announced plans to release 100 million barrels of crude and diesel stocks over four months, including a substantial diesel release during the first 20 days. However, the Middle East situation continued to create uncertainty. Discussions involving the US and Iran included proposals concerning the Strait of Hormuz and a possible easing of restrictions, but the prospects for a lasting agreement remained unclear. The US administration’s position, regional military developments and the risk of renewed disruption remain important factors for energy markets. For India, elevated crude prices can increase the import bill, put pressure on the current account and influence inflation and the rupee. A sustained decline in oil prices could provide some relief, while renewed supply disruptions may increase cost pressures for transport, aviation, chemicals and other energy-intensive businesses. The market’s near-term response will depend on whether diplomatic efforts translate into a durable improvement in supply conditions.
The coming week will be important for domestic monetary-policy expectations and global risk sentiment. Nifty has entered a historically rare phase, recording eight consecutive weekly declines, its longest losing streak in 25 years. While the prolonged correction reflects sustained selling pressure, the overall magnitude of the decline remains considerably lower than major historical sell-offs witnessed in 2008 and 2020. From a technical perspective, the 22,150-21,700 zone remains critical for the index. A sustained move below 21,000 could intensify selling pressure and push the market further into negative territory. Conversely, stability around the current support zone, followed by a sustained recovery, could improve market sentiment and open the possibility of a move towards 22,800-23,000. Indian markets are likely to track the RBI’s monetary policy decision, domestic PMI readings and global economic data. The RBI’s monetary policy decision on 7 October will be closely monitored for its repo-rate decision, policy stance, inflation assessment and growth outlook. In the US, investors will track the ISM Services PMI on 5 October, trade data on 6 October and FOMC minutes on 7 October. The preliminary Michigan Consumer Sentiment reading on 9 October will provide another indication of household confidence. China’s September foreign exchange reserves are also due on 7 October. The recent decline in benchmark indices makes market breadth and the response to incoming data important to watch. A moderation in bond yields or crude prices could ease some external pressure, while renewed increases could keep sentiment cautious. Investors should continue to maintain a disciplined, long-term investment approach while focusing on fundamentally strong companies capable of navigating near-term macroeconomic and geopolitical uncertainties.