Sensex, Nifty Outlook: 4 Factors Including FII Buying, Oil Prices And RBI Rate Hikes To Watch This Week

Indian stock markets are heading into a new trading week after the Sensex and Nifty ended their recent rally with losses on Friday. Investors will track foreign institutional investor (FII) activity, crude oil prices, Nvidia's earnings and expectations of an interest rate hike by the Reserve Bank of India (RBI).

The Sensex closed 319 points lower at 81,592. The Nifty 50 slipped 155 points to end at 25,144. Both indices came under selling pressure after gaining for 10 consecutive sessions.

What Are The 4 Factors Investors Should Watch This Week?

1. Foreign Institutional Investor Buying

Foreign institutional investors (FIIs) continued buying Indian equities on Friday, marking their tenth consecutive session as net buyers. Provisional data from the National Stock Exchange (NSE) showed purchases worth ₹5,736.55 crore.

Their total net investment since late October has reached nearly ₹89,515 crore. This follows record withdrawals of ₹2.95 lakh crore from Indian stocks during the first 10 months of 2026.

The direction of foreign fund flows will be an important factor in determining how the benchmarks trade this week.

2. Crude Oil Prices And Middle East Developments

The oil market saw some relief last week after US President Donald Trump indicated that the war in Iran was effectively over. Prices initially declined following his remarks.

The situation changed after fresh attacks on Saudi energy facilities and disruptions to shipping through the Strait of Hormuz. Concerns over global oil supplies pushed prices higher again.

Brent crude is trading at around $96 per barrel.

3. Nvidia's Quarterly Earnings

Investors are awaiting Nvidia's quarterly results, scheduled for Tuesday. The announcement comes after the chipmaker's shares suffered a sharp sell-off following controversy surrounding its CEO, Jensen Huang.

The decline has wiped billions off Nvidia's market value over the past week.

The earnings announcement could bring further movement in AI-related stocks.

4. RBI Interest Rate Hike Expectations

India's October inflation figures have raised concerns over a possible interest rate increase by the Reserve Bank of India (RBI).

Retail inflation rose to 6.09% in October 2026 from 5.54% in September. This marked the twelfth consecutive month of accelerating consumer prices. Inflation has also crossed the RBI's upper tolerance limit of 6%.

Vinod Nair, Head of Research at Geojit Investments, expects markets to begin factoring in the possibility of a rate hike.

Most economists anticipate a 25-basis-point increase at the RBI's December policy meeting, although views on the likely decision remain divided.

Will Sensex And Nifty Continue Their Rally Or Enter Consolidation?

Indian stock markets saw limited movement during the holiday-shortened week. Buying by foreign investors and better-than-expected second-quarter earnings helped the Sensex and Nifty finish the week with gains.

Inflation, however, remained a concern. In the US, higher inflation figures raised expectations of an interest rate hike by the Federal Reserve in December. Back home, a rise in food prices took retail inflation to its highest level in two years.

Mid-cap and small-cap shares performed better than the benchmark indices. Banking, financial services, automobile and real estate stocks attracted buying interest, while IT and metal shares faced selling pressure. Selling also intensified towards the end of the week, particularly in banking, automobile and real estate shares.

Nair expects Indian equities to undergo near-term consolidation. He favours a selective approach, with a preference for large-cap companies offering better earnings visibility and opportunities to buy during market declines.

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