‘Higher fuel costs, production and debt costs will reduce corporate profits, leading to a decline in valuations.’ This stark warning from Siddharth Vora, Fund Manager at PL Asset Management, encapsulates the current sentiment in the Indian stock market as it braces for a turbulent trading session.
As of April 10, 2026, the Indian stock markets are expected to start trading with some volatility, primarily driven by the continuous withdrawal of funds by Foreign Institutional Investors (FIIs). This trend has raised alarms among investors, particularly in light of the Indian rupee’s weakness against the US dollar, currently at ₹92.7870, and the rising Brent crude oil prices, which are trading around $96.59 per barrel.
On April 2, FIIs sold approximately ₹9,229.52 crore worth of stocks, while Domestic Institutional Investors (DIIs) managed to offset some of this selling by purchasing stocks worth ₹6,709.74 crore on the same day. However, the overall environment remains precarious, with the Short Long Ratio for FIIs rising to 16.8, indicating a significant increase in short positions. This suggests that many investors are betting against the market, further fueling concerns about its stability.
Despite these challenges, there are signs of resilience within the market. Small Cap indices have shown a resurgence, with 60% of companies trading above their 10-day moving average. Additionally, the Nifty index is currently trading at approximately 17.5 times forward earnings, which is below its long-term average. Analysts project that the Nifty’s Earnings Per Share (EPS) is expected to grow by 13-15% in the fiscal years 2025-27, providing a glimmer of hope for investors.
Market analysts are closely monitoring geopolitical developments, especially regarding crude oil prices and FII flows. One research firm, Emkay Global Research, noted, ‘If a ceasefire occurs between the US and Iran, there could be a significant rally in Indian stocks.’ This highlights the intricate relationship between global events and local market performance.
In the midst of this uncertainty, investors are advised to focus on companies with strong fundamentals and clear earnings potential. The current market dynamics necessitate a cautious approach, as the impact of continuous FII selling on domestic buying remains unclear. Furthermore, the future trajectory of crude oil prices and their effect on inflation and GDP growth is uncertain. Details remain unconfirmed.
As the market navigates these turbulent waters, the next expected developments will hinge on both domestic and international factors. Investors will be keenly observing how geopolitical tensions evolve and their potential impact on market sentiment and valuations.
