Domestic markets are likely to open on a flat note amid cautious sentiment. Despite US stocks hitting a record high on Friday following the US Federal chief’s dovish stance on interest rates, analysts expects Indian stocks to remain cautious due to the tariff announcements by the US President Trump administration.
Gift Nifty at 24,976 against Nifty August futures at 24,898.20 and September futures value of 25,039.20 indicates a flattish beginning. Analysts expect volume to remain low due to a truncated week (Market holiday on Wednesday for Ganesh Chathurthi).
Hariprasad K, SEBI registered Research Analyst and Founder – Livelong Wealth, said globally, the Dow Jones surged to record highs on Friday after Fed Chair Powell signalled potential rate cuts next month. This rally is expected to boost sentiment in Indian IT stocks, which derive significant revenue from the US market. ”Indian markets may stay range-bound unless Nifty decisively crosses 25,100. IT could see near-term strength, while banking remains the weak link.”
Ajit Mishra – SVP, Research, Religare Broking Ltd, said: Given this backdrop, maintaining a measured long bias is prudent, with staggered buying on dips in quality names where earnings visibility remains strong. “Defensive sectors such as pharmaceuticals and select consumption-driven value chains could serve as stabilisers, while policy beneficiaries from the GST overhaul in consumption ecosystems may continue to provide opportunities,” he said
Foreign portfolio investors will continue to remain cautious in their approach. Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said FIIs continue their selling spree in August. This month, up to August 23, FIIs sold equity for ₹25,564 crore through the exchanges, taking the total selling up to August 23 to ₹1,57,440 crore.
“FIIs have been sellers in the bond market, too. Since FIIs continue to invest through the primary market/ QIP route, the principal reason for selling through the exchanges is the high valuations in India relative to other markets, particularly emerging markets. “
FIIs were sellers in banking and financials, too, since this segment accounts for a bulk of their assets under custody. They continued to sell in IT on concerns of poor growth prospects and limited earnings visibility of this segment. FIIs were consistent buyers in telecom and capital goods stocks. In the near term, FIIs may reduce their selling since the dollar is weakening, responding to rate cut expectations from the Fed in September. The Fed chief Jerome Powell’s Jackson Hole speech indicates a rate cut in September, he added.
Vipul Bhowar, Senior Director, Head of Equities, Waterfield Advisors, said: “Foreign Institutional Investors (FIIs) have been net sellers for most of 2025, and this trend continues in August, which has seen substantial outflows despite occasional daily inflows. When we examine the data for secondary and primary market inflows, it becomes evident that FIIs are still participating in the primary market. This indicates their ongoing investment in new themes and businesses, while they are reducing their exposure to sectors that are experiencing slower growth.”
The derivative segment also signals cautious sentiment.
Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities, said: the options market mirrors the cautious sentiment, with call writers tightening their grip. The 25,000 strike has seen aggressive call writing, with open interest swelling to 1.85 crore contracts, cementing it as a formidable ceiling.”
On the downside, the 24,500 strike holds the highest put open interest at 73.63 lakh contracts, serving as a near-term support base. Notably, put writers have begun shifting positions to lower strikes, while call writers remain dominant, signalling restrained conviction for a breakout. The Put-Call Ratio (PCR) slipped sharply from 1.01 to 0.61, underscoring the supply pressure from higher levels,” he said.
Meanwhile, India VIX climbed 3.12 per cent to close at 11.72. Despite global uncertainties, volatility remains contained, pointing more towards consolidation than a sharp correction. The muted VIX suggests cautious optimism, with no signs of panic in the market.
According to Ajit Mishra, in the coming week, investors will monitor domestic data releases closely, including the HSBC Manufacturing, Services, and Composite PMIs, along with the key IIP and GDP prints, which will serve as critical indicators of economic momentum. On the global front, geopolitical developments and the market reaction to any dovish undertone from the US Fed Chair’s Jackson Hole remarks will remain key triggers.
“Investors and traders should manage event risks carefully, trimming leveraged positions ahead of key domestic and global data and redeploying selectively as volatility eases. Tight stop-losses around recent swing levels are advisable, especially given the current underperformance in banking and IT sectors,” he said.
Published on August 25, 2025
