Will Nifty hit a new all-time high this week? 6 factors will seal the deal

The Nifty 50 looks set to challenge a new all-time high this week as six key factors could converge to strengthen bullish sentiment – from expectations of a US Fed rate cut and an easing in FII selling to strong domestic earnings and progress in trade talks. The optimism comes after the benchmark index nearly hit a new peak last week before retreating on mild profit booking as investors paused for crucial global and policy developments. These are the key factors that are likely to determine the direction of the market.

1. Hope for Fed rate cuts

US inflation data released on Friday came in lower than expected, boosting hopes for a 25 basis point rate cut at the Federal Reserve’s October 28 meeting. Markets are also considering the possibility of further cuts in December and January, indicating a possible shift to a more accommodative stance. Such a move generally benefits emerging markets like India as it boosts foreign capital inflows and investors’ risk appetite.

2. Progress in India-US trade negotiations

Reports indicate that India and the US are close to finalizing a trade deal, boosting investor optimism. However, Commerce Minister Piyush Goyal’s comment that India will not rush into deals with restrictive conditions has dampened enthusiasm. A successful deal could ease the 50% tariffs currently imposed on Indian exports, half of which are in retaliation for Russian oil imports. Trump’s recent comments suggesting India would significantly reduce its Russian oil imports, if confirmed, could also have an impact.

3. Shifts in crude oil dynamics

Crude oil prices rose 5% on new US and EU sanctions on Russian oil companies, raising concerns about tighter global supply and rising inflation risks. Indian refiners are preparing to cut imports of Russian oil to comply with sanctions, a move that could ease trade talks with the US but could weigh on India’s import bill and fiscal position.

4. Anticipating a trade breakthrough between the US and China

Markets are optimistic that the upcoming meeting between President Donald Trump and Chinese President Xi Jinping during Trump’s Asia tour could advance a US-China trade deal. Analysts expect the US to take a softer stance given China’s strategic influence over rare earths and magnets, which are key to global manufacturing.

5. Focus on corporate profits in the second quarter

Investors will be keeping a close eye on the second quarter results, which have exceeded expectations so far. The defense sector will take center stage as Mazagon Dock and Bharat Electronics Ltd (BEL) report results, with a focus on government orders and new contracts. The Nifty India Defense Index is already up 26% in 2025, making it one of the best-performing sectors. Other key companies set to announce results include Kotak Mahindra Bank, PNB Housing, IOC, Coal India, Adani Power, Dabur, DLF, ITC, Manappuram Finance, BHEL and NTPC.

6. FII activity

Sentiment among foreign investors is showing the first signs of stabilization after months of selling. On October 24, 2025, FIIs became net buyers of Indian equities worth Rs 621 crore, while DIIs remained net buyers with Rs 173 crore. Over the past year, FIIs have sold shares worth over Rs 2 lakh crore, while DIIs have bought shares worth over Rs 5 lakh crore, underscoring the strong domestic institutional support amid the foreign outflows. Any material shift could further strengthen sentiment on the stock markets. Indian shares retreated on Friday, with the Sensex and Nifty snapping a six-day winning streak as investors booked profits after benchmarks hovered around record highs. The pause came after a rally driven by optimism about easing global trade tensions and expectations of a recovery in corporate profits.

The S&P BSE Sensex fell 0.41% to 84,211.88, down 344.52 points, while the NSE Nifty 50 fell 0.37% to 25,795.15. Financials weighed on benchmarks, with the Nifty Bank index down 0.7%. The FMCG index fell 0.8%, dragged down by Hindustan Unilever’s 3.3% fall and a 2.1% drop in Colgate-Palmolive (India), after both companies posted subdued September quarter results.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)