Indian stocks are expected to open flat on Monday as global and domestic factors, including fluctuating foreign flows and sector-specific trends, influence investor sentiment amid ongoing geopolitical tensions and US economic data.
Indian shares are set for a cautious start on Monday, with Gift Nifty pointing to a largely flat opening after the Nifty August futures settled at 24,655 on Friday. Traders are also watching the new closing auction session mechanism, which has become a key source of short-term volatility since its rollout. A firm tone in Asian markets, where major bourses were up 0.5% to 2% in early trade, is offering some support, but investors remain alert to the July US inflation reading, moves in the dollar and the latest signals from the US Treasury market.
Foreign flows remain an important backdrop. Data compiled by market trackers show that foreign portfolio investors have continued to shift in and out of Indian equities in large amounts this year, with the first half of 2026 marked by heavy overseas selling that domestic institutions helped absorb. Business Standard reported that domestic institutional investors bought a record ₹4,000 crore a day on average in the first six months of the year, helping to cushion the market even as foreign investors pulled back sharply.
That broad pattern has not yet fully reversed. Mint reported that FPIs sold more than ₹2.19 lakh crore worth of Indian equities so far in 2026, although they also showed selective interest in primary issues and had turned net buyers in July after a string of outflows. That mixed positioning suggests overseas investors remain willing to back new offerings and specific sectors, but are still uneasy about the secondary market’s near-term direction.
Sector cues are similarly uneven. Auto, information technology, metals and public sector banks have attracted buying interest, while private banks, real estate and financial services have seen profit-taking. Crude oil prices have eased, which should help risk appetite, but the rebound in the dollar index and persistent West Asia tensions, especially around the Strait of Hormuz, could keep pressure on sentiment. For the rally to broaden, analysts say the market will need stronger participation beyond a few large sectors and clearer evidence that earnings growth is catching up with valuations.
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