After one of the most challenging weeks of 2025, Indian equities enter the final trading days of September and head into October 2025 with bruised sentiment and heightened caution.
Both benchmark indices, Nifty and Sensex slumped around 2.7% last week, while the broader markets suffered even more, with the Nifty Midcap and Smallcap indices falling nearly 5%. The turbulence began with a surprise hike in H-1B visa fees, which dampened sentiment in IT stocks.
Stock Market Weekly Forecast For September 29 To October 3, 2025
The last week of September closed on another negative note, as 100% tariffs were imposed on branded and patented pharma imports, sending pharma stocks sharply lower. As we move into October 2025, investors remain on edge, watching for cues from central bank policy, global developments and whether markets can find their footing after weeks of sustained pressure.
Sensex, Prediction This Week: Cautious Optimism, But More Weakness Ahead if Key Levels Break
Nifty has once again slipped below its key moving averages, but price action remains broadly range-bound. Immediate support lies between 24,550-24,500, which must hold to prevent deeper cuts. If support sustains, a bounce toward 24,800-25,000 could materialize. However, a breach below 24,500 opens downside targets of 24,400, 24,340, and even 24,200.
“Given the prevailing structure, a “sell on rise” approach remains favorable, though traders should adopt strict stop-loss measures to manage risk in this volatile environment,” Mr. Sumeet Bagadia, Executive Director of Choice.
Bank Nifty also remains under pressure, having broken below crucial moving averages. “If selling pressure persists and the index decisively breaks below the 54,000 level, further downside towards 53,784 (200-day EMA)and 53,500 may be seen. On the upside, immediate resistance is placed at 54,900, followed by 55,270 and 55,500,” as per the brokerage firm Choice report.
“Technical indicators present a mixed outlook. The RSI, currently at 40.92 and trending upward, signals improving momentum. However, Bank Nifty is trading below both the 20-day and 50-day EMAs, and is now approaching the 200-day EMA. A decisive close below the 200-day EMA would reinforce the bearish bias, whereas a sustained move above it could shift sentiment toward the positive side,” noted the expert.
Key Factors To Drive Market Sentiment This Week
Foreign institutional investors (FIIs) turned aggressive sellers, pulling out nearly Rs 19,500 crore from Indian equities, while domestic institutional investors (DIIs) absorbed a large portion with Rs 17,500 crore in purchases.
However, a significant chunk of DII flows got diverted into the ongoing IPO rush, offering little relief to secondary markets. Meanwhile, retail and HNI investors appear jittery, especially as September 27 marked one year since the Nifty’s all-time high of 26,277-without any substantial returns since then.
Looking ahead to the week of September 29 to October 3, all eyes will be on India’s macro triggers and global cues, with traders watching key developments that could determine the near-term direction of the market as per Santosh Meena, Head of Research at Swastika Investmart.
RBI Policy on October 1, 2025 to Set the Tone
The most crucial domestic event is the RBI monetary policy review on October 1, where opinions remain divided on the possibility of a rate cut. While inflation has shown signs of cooling, the RBI has previously signaled caution, especially amid rising global oil prices and currency weakness. The market is pricing in a “pause” scenario, but any dovish surprise could trigger a short-term relief rally.
Additionally, IIP data (Index of Industrial Production) and early signs of festive season demand will be closely tracked by investors and analysts alike. A robust start to the festival sales may help ease concerns over consumption slowdown in rural and semi-urban areas.
Global Cues: US-India Trade Relations, Dollar Strength and Crude Oil
On the global front, markets will remain sensitive to US-India trade relations, especially after last week’s pharma tariff announcement. Any positive commentary or softening in stance could support sentiment. Beyond that, US macroeconomic data, dollar index movement, and crude oil prices will also drive investor behavior.
The rupee, which has slipped to all-time lows, remains a key pressure point. A break below the 89-mark could accelerate FII outflows and drag the indices lower. Additionally, elevated crude oil prices continue to pose risks for India’s import bill and inflation outlook.
Derivatives: Expiry, FII Positions
The NSE monthly F&O expiry on Tuesday will be a critical event. The market is deeply oversold, as reflected by a Put-Call Ratio (PCR) of 0.63, while FIIs currently hold 86% net shorts in index futures. The key question is whether FIIs will cover some of these short positions, triggering a technical bounce, or double down on their bearish stance amid weak sentiment.
India VIX
The sharp rise in India VIX (volatility index) from record lows is also unsettling for traders, indicating rising nervousness in the system. Elevated volatility is likely to persist into the next week unless a significant positive trigger emerges.
“The market is extremely oversold, with a PCR at 0.63 and FIIs holding 86% net shorts in index futures. The big question: will FIIs cover shorts to trigger a bounce, or will they press their bearish bets ahead of expiry? Adding to the nervousness, India VIX has spiked sharply from record lows, a concern for F&O traders,” said Santosh Meena from Swastika Investmart.