The upcoming trading week between August 4 to 8, 2025, will prove to be a tough week for Indian markets since multiple bearish forces will look to ensure sellers retain the upper edge and keep sentiment weakened.
Market Mood: Bears Tighten Grip
Indian stocks are under siege, with the Nifty50 and Sensex recording their fifth consecutive week of falls—their two-year-longest losing run. Core gauges closed last week in the red, while sectoral action was lack-luster across the board, with only some relative stability in FMCG. Even the Nifty Midcap and Smallcap indices lagged, registering deeper losses, and foreign institutional investors (FIIs) remained net sellers, selling over ₹41,000 crore in July alone.
The technical landscape is precarious: Nifty is floating just above a key support level of 24,500, with additional downside on the cards in case this support falters. Attempts at rebound are poised to meet strong resistance at 24,800 and 25,000, given the weak sentiment in the face of ongoing FII selling and the lack of solid domestic buying.
Global Headwinds: Dow Jones, ADRs, and GIFT Nifty
Global signals are also bearish. The recent decline in Dow Jones has fuelled risk aversion across the world, directly influencing Indian sentiment and affecting the ADRs of prominent Indian players like Infosys and Wipro, which registered losses mirroring the weakness on Wall Street. The GIFT Nifty futures indicate a weak or flat opening for the week ahead, emphasising global concerns and the lack of short-term catalysts for bulls.
Macro Events: RBI MPC and the Rate Cut Debate
The spotlight would be firmly on the Reserve Bank of India’s Monetary Policy Committee (MPC) meeting between August 5-7. The market is still polarised: some view a chance of a 25-basis-point rate cut, pointing to weak inflation and emerging growth worries. Yet, the general view is that RBI keeps rates unchanged and instead pursues another “wait and watch” as yet global as well as domestic conditions are not amenable enough for further monetary relaxation. A dovish RBI bias may provide some relief momentarily, but an unambiguous rate cut in this round appears less likely.
Uncertainty in Crude Oil and US Trade Policy
Crude oil prices remain volatile as OPEC+ supply rises and President Trump’s imposition of new tariffs adds unpredictable elements to global demand. Brent is stable at around $71 per barrel, but headline risk remains high due to trade tensions and potential further restrictions on Russian oil. Trump’s 25% tariff on Indian goods, which comes into effect August 7, has injected additional anxiety for export-oriented stocks and for India’s macroeconomic outlook.
Earnings Season and FII Selling Persistence
The Q1 earnings season rolls on with a crowded calendar for the first half of August. Although profit growth was impressive in some sectors—most significantly Media & Entertainment—profit warnings and poor performance in metals and a few large caps have added to the worries. FII outflows are a persistent headwind, compounded by the stronger dollar and risk-off actions in global portfolios.
What then?
In short, the next week is set to remain swamped with bearish bias in charge and upside attempts bound to be sold into. Keep an eye on:
- MPC policy guidance and rate decision (August 7),
- Additional FII flows,
- The enforcement of US tariffs in actuality and crude oil volatility,
- Important earnings announcements for market direction.
Short-term stability will be predicated upon Nifty’s ability to maintain the 24,500 support, the RBI surprising dovishly, or a definitive positive shift in global markets—all of which, at present, appear in short supply.
