The Indian stock market next week will sail through a combination of domestic and international factors affecting investor sentiments and market dynamics. Here is a concise overview of the salient factors shaping the market during the week of August 25 to August 29, 2025.
Ganesh Chaturthi Holiday on August 27
The stock exchange will be closed on August 27 due to Ganesh Chaturthi, an important festival particularly in Maharashtra, whose headquarters are home to both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). This implies trade will be feasible only on four days next week—August 25, 26, 28, and 29. The holiday trims the trading week, hence is expected to cause decreased volumes and heightened volatility as traders rebalance their positions during the short time they have.
Effect of Another 25% US Tariff on Indian Exports
The United States has imposed an extra 25% tariff on some Indian products, increasing trade relations concerns. The action, which is taken against a backdrop of heightened geopolitical tensions and trade frictions, is likely to cut India’s exports to the US, with some sectors such as gems, jewelry, textiles, and automobiles likely to be affected. While the impact of the tariffs is likely to bear down on such sectors, overall market response has been mixed, with the IT and banking sectors being less impacted owing to low US exposure. The tariff may add pressure to the corporate earnings and be market dampening.
Ongoing Foreign Institutional Investor (FII) Selling
Foreign Institutional Investors (FIIs) have also been net sellers in the Indian equity markets of late, selling equities totalling more than Rs 25,000 crore in August alone. The consistent selling pressure has taken a toll on the benchmark indices, especially in the areas of banking and IT, reflecting caution among foreign investors due to elevated valuations and external uncertainties. But some experts opine that FII selling could calm down if the US Federal Reserve takes a dovish approach, possibly translating into a weaker dollar and renewed capital flows.
Weakening Indian Rupee
The Indian rupee has further declined against the US currency, staying in the mid-80s to high-80s range. The weakening is caused by reasons like a rise in a stronger dollar, trade war with the US, a higher crude oil import bill, and occasional foreign capital outflows. Weakening of the rupee has inflationary implications and increases the import cost, affecting corporate margins and market valuations.
Fed’s Dovish Stance Bringing Hope
US Federal Reserve Chairman Jerome Powell’s dovish comments at the recent Jackson Hole symposium have indicated an imminent rate cut in the US. This has been welcomed by markets across the world, including India, as it implies lower interest rates going forward, a weaker dollar, and better liquidity. A dovish Fed is likely to help Indian equities by promoting FII flows and lowering borrowing costs.
Crude Oil Price Trends
Crude oil prices have witnessed weak recovery, with Brent crude trading at around $67–68 per barrel. Prices, however, remain lower than their year-ago levels. Movement in crude affects India’s trade deficit as well as inflation since the country heavily relies on oil imports. Stability or a drop in crude oil prices would release input cost pressure for Indian firms.
F&O Maturity Extension News
The Securities and Exchange Board of India (SEBI) is considering extending the maturity tenure of equity derivatives beyond the current monthly cycle to promote long-term investing and better risk management. While this proposal aims to bring more stability and reduce retail speculation, its implementation could temporarily reduce trading volumes and impact revenues for exchanges and brokers. Market participants will closely watch SEBI’s final decision as it could mark a significant shift in India’s derivatives market.
ALSO READ | Need to Increase Derivatives’ Maturity, Says SEBI Chairman
In short, the coming week offers a complicated blend of limited trading days, external tariff pressure, currency woes, and expectations of a dovish Fed. Investors will be watching closely for global signals, domestic policy news, and crude oil dynamics to manage market volatility through a truncated but action-packed week ahead.
