Indian equity markets ended the week on a positive note, supported by buying interest in the latter part of the week and stock-specific movements amid the ongoing September-quarter earnings season. The S&P BSE Sensex advanced 1,335.70 points, or 1.83%, to settle at 74,459.53, while the Nifty 50 gained 453.10 points, or 2.00%, to close at 23,053.10. Broader markets outperformed the frontline indices, with the BSE 150 Mid-Cap index rising 3.42% and the BSE 250 Small-Cap index gaining 3.88%, indicating a recovery in risk appetite. Investors also assessed industrial activity data, which showed that India’s Index of Industrial Production (IIP) growth moderated to 6.7% in September from 8.0% in August. Despite the weekly recovery, the market continues to face external headwinds from elevated crude oil prices, geopolitical uncertainty and concerns about global inflation. The US Federal Reserve’s decision to maintain interest rates, alongside indications of persistent price pressures, also remained important for market sentiment. Going forward, domestic equities are likely to remain sensitive to corporate earnings, global market movements, foreign institutional investor flows and crude oil prices. The near-term outlook remains cautiously constructive following the weekly rebound, but sustained gains will require stronger earnings visibility and stability in global markets.
Global equity markets experienced heightened volatility towards the end of October, as investors reassessed the outlook for artificial intelligence-related investments, corporate earnings and monetary policy. US technology stocks came under significant pressure following disappointing results and cautious business outlooks from major companies. On Friday, the Nasdaq Composite declined 2.86% to 25,437, while the S&P 500 fell 1.82% to 7,580.07. The Dow Jones Industrial Average declined 1.09% to 51,770.31. For October, the Nasdaq dropped 5.3%, while the S&P 500 declined 0.9%; the Dow gained 1.7%. Concerns about the sustainability of heavy artificial intelligence investment intensified after several technology companies faced pressure on earnings, cash flow and capital expenditure expectations. Intel’s weak quarterly outlook and disappointing updates from Amazon and Alphabet reinforced investor concerns about whether substantial investments in AI infrastructure would generate adequate returns. This led to selling across semiconductor and technology stocks, while defensive areas such as consumer staples and healthcare showed relative resilience. Monetary policy remained another key focus. The US Federal Reserve held its target interest rate at 3.75%–4.00%, although two members preferred a 25-basis-point increase. The Fed’s assessment indicated that economic activity remained resilient, but inflation continued to be elevated. Markets subsequently increased the implied probability of a December rate hike. In the UK, retail sales declined 0.4% during September. Japanese and Chinese equity markets also weakened amid technology-sector selling and concerns about global AI demand.
Geopolitical tensions involving the US, Israel and Iran continued to influence global financial markets, particularly energy prices and investor risk appetite. Concerns intensified following reports of an attack on a tanker in the Strait of Hormuz, a strategically important route for crude oil and petroleum product shipments from the Gulf. The incident highlighted the vulnerability of regional energy supply chains and increased concerns about further escalation. Security risks also remained elevated in Saudi Arabia following reported Houthi attacks targeting critical infrastructure, including the Ras Tanura and Rabigh refineries and an Aramco production facility at Abqaiq. The US embassy in Riyadh announced the departure of non-emergency government employees and their families amid the security situation. Separately, a Saudi-led coalition reported intercepting a cruise missile launched towards the kingdom’s western region. Diplomatic efforts nevertheless continued. Qatari mediators returned to Tehran as part of efforts to facilitate an agreement between Washington and Tehran. Reports also indicated that the US had reached out to Iran in an attempt to revive dialogue, although Iran had not yet responded positively to the communication. The outlook remains uncertain, as the direction of negotiations and the possibility of further military action could significantly influence oil prices, shipping costs and global inflation expectations. Any disruption to energy infrastructure or shipping routes could intensify supply concerns, while credible progress towards de-escalation could ease some of the geopolitical risk premium.
Crude oil prices rose sharply during the week and ended October at elevated levels, reflecting concerns about potential supply disruptions in the Middle East. Brent crude futures for December delivery settled at US$117.64 per barrel on Friday, gaining 2.4% on the day before the contract expired. The more active January Brent contract rose to US$113.43 per barrel, while US West Texas Intermediate (WTI) crude settled at US$104.12 per barrel. For October, Brent advanced 13.6% and WTI gained 15.2%. The rally was primarily driven by geopolitical risks, particularly the possibility of further escalation in the Iran conflict and the attack on a tanker in the Strait of Hormuz. Reported Houthi attacks on Saudi energy infrastructure and the shutdown of a Libyan crude pipeline also added to supply concerns. Although Saudi crude exports reportedly increased in October, the security risks surrounding regional production facilities and shipping routes continued to support prices. The near-term outlook remains highly sensitive to geopolitical developments, the continuity of Gulf oil shipments and the outcome of diplomatic efforts. The US midterm elections on 3 November may also contribute to uncertainty around the geopolitical outlook. Any further escalation could sustain the risk premium in crude prices, whereas meaningful progress towards de-escalation could moderate prices.
India’s economic outlook remains supported by domestic demand, manufacturing activity and infrastructure-related sectors, although recent data indicate some moderation in the pace of expansion. The International Monetary Fund also highlighted India’s growth momentum and projected growth of 7% in both FY2026–27 and FY2027–28. However, weather-related risks remain important. An unfavourable monsoon or a stronger El Niño could affect agricultural output, weigh on rural demand and increase food inflation, potentially affecting household purchasing power. Industrial production showed continued expansion but moderated in September. IIP growth declined to 6.7% from 8.0% in August. Manufacturing output increased 7.6%, while electricity and gas supply rose 11.2%. Mining and quarrying contracted 6.2%, highlighting uneven performance across industrial segments. Within manufacturing, motor vehicles, electrical equipment, and rubber and plastic products were among the leading positive contributors. Capital goods grew 10.4%, intermediate goods 12.2%, and infrastructure and construction goods 7.2%, indicating continued activity in investment-linked segments. Policy support for domestic manufacturing also remained in focus. The Union Cabinet approved the Container Manufacturing Promotion Scheme with a budgetary outlay of Rs. 10,000 crore through FY2039–40. The scheme aims to strengthen domestic production capacity, reduce import dependence and improve supply-chain resilience, with annual capacity targeted to increase to around 7.5 lakh TEUs. Globally, inflation remains a concern. US consumer inflation expectations increased in October, while the Federal Reserve maintained interest rates but signalled that inflation remained elevated. These developments could affect global financial conditions and capital flows into emerging markets. Overall, India’s growth outlook remains relatively resilient, supported by domestic demand and industrial activity. However, moderating IIP growth, energy-price volatility, weather-related risks and global financial uncertainty warrant monitoring. The trajectory of manufacturing and services PMIs, inflation and corporate earnings will be important in assessing the sustainability of economic momentum.
Indian equity markets are likely to remain driven by the September-quarter earnings season, domestic economic indicators and global developments. The recent weekly recovery provides a supportive near-term signal, but elevated crude oil prices, uncertainty around the Iran conflict and volatility in global technology stocks may limit sustained upside. Investors should evaluate these results against revenue growth, profitability, margins, cash flows and management guidance. The weekly gain in benchmark indices and stronger performance in mid-cap and small-cap stocks indicate an improvement in buying interest. However, the sustainability of this recovery will depend on earnings delivery, global risk appetite and stability in crude oil prices. For the Nifty, the 22,500-22,200 zone remains the key support range, while 23,500-23,700 represents the broader resistance zone. A sustained move above 23,200 could support a further recovery, whereas a break below the support range would weaken the technical outlook. Investors should remain selective, monitor company-specific earnings and avoid extrapolating the recent rebound without confirmation from market breadth and price action. Crude oil prices, geopolitical developments, US employment data, foreign institutional investor activity and global technology-sector performance will remain important variables for the week ahead.