As of April 10, 2026, the Indian stock markets are expected to start trading with notable volatility. This comes on the heels of significant withdrawals by Foreign Institutional Investors (FIIs), who sold approximately ₹9,229.52 crore worth of stocks on April 2. The continuous outflow of foreign capital has raised alarms among investors, leading to a cautious sentiment in the market.

Adding to the market’s woes, the Indian rupee is currently weak against the US dollar, trading at ₹92.7870. Coupled with rising Brent crude oil prices, which are hovering around $96.59 per barrel, the macroeconomic landscape appears increasingly challenging. PL Asset Management has indicated that these factors could severely impact corporate profitability and, consequently, stock valuations.

Despite the negative sentiment, there are signs of resilience within the market. Domestic Institutional Investors (DIIs) have stepped in, purchasing stocks worth ₹6,709.74 crore on the same day that FIIs were selling. Furthermore, small-cap indices have shown a resurgence, with 60% of companies trading above their 10-day moving average, indicating some underlying strength.

Looking ahead, analysts are keeping a close eye on geopolitical developments. Emkay Global Research stated, ‘If a ceasefire occurs between the US and Iran, there could be a significant rally in Indian stocks.’ Such geopolitical shifts could provide much-needed relief to an otherwise strained market.

The market’s short-term direction will largely depend on crude oil price movements and FII flows. The Short Long Ratio for FIIs has risen to 16.8, indicating a significant increase in short positions, which reflects heightened uncertainty among investors. As the Nifty index trades at approximately 17.5 times forward earnings, below its long-term average, the valuation landscape remains complex.

Moreover, Wipro’s Q4 FY26 results are expected to be weak, further contributing to the cautious outlook among investors. Analysts project that the Nifty’s Earnings Per Share (EPS) could grow by 13-15% in the 2025-27 fiscal years, but this optimistic forecast is overshadowed by current market conditions.

Details remain unconfirmed regarding the long-term impact of continuous FII selling on domestic buying. The future trajectory of crude oil prices and their effect on inflation and GDP growth also remain uncertain. Investors are urged to focus on companies with strong fundamentals and clear earnings potential as they navigate this volatile environment.

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