Stock Market Outlook: Volatility Expected as Profit Booking, Global Cues Weigh; Nifty, Sensex May Consolidate

After a strong six-day rally, the Indian equity markets witnessed a sharp correction on Friday, with both benchmark indices, Sensex and Nifty falling nearly 1%, as cautious sentiment gripped investors ahead of US Federal Reserve Chair Jerome Powell's Jackson Hole speech. The downturn ended a winning streak, signalling possible volatility in the days ahead as markets respond to a mix of global and domestic triggers.

Stock Market Outlook for Monday, August 25

On a weekly basis, however, the broader mood remained positive. The BSE Sensex gained 709.19 points, or 0.87%, while the Nifty 50 rose 238.8 points or 0.96%, reflecting underlying bullishness despite short-term uncertainty. Experts attribute the decline on Friday to profit booking near key technical levels and renewed concerns around global trade tensions and upcoming US tariff decisions on Indian goods.

Nifty Prediction Today

Technical indicators suggest a mixed outlook for the Nifty 50 index on Monday, August 25. After recent gains, the index approached a key technical resistance near the 61.8% Fibonacci retracement level at 25,160, leading to a sharp bout of profit booking. A bearish candle formation on the daily chart indicates that the market may remain under pressure in the short term.

The Nifty has already retested last Monday's low levels of 25,000 to 24,850. If it breaches the 24,850 mark, experts warn of a deeper correction towards 24,600, where multiple moving averages are currently aligned, offering potential support.

On the upside, the 25,160 level remains a key resistance. Unless the index decisively breaks above this threshold, a sustained bullish trend is unlikely. Traders are advised to remain cautious and look for confirmation signals before initiating fresh long positions.

Sensex Prediction Today: Key Levels to Watch

The BSE Sensex is expected to mirror Nifty's movement with volatility on the cards. Any sharp moves in the US market overnight or shifts in FII activity could lead to gap-up or gap-down openings. Key support for the Sensex lies around 82,300, while resistance is pegged near 83,800 in the near term.

Stock Market Week Ahead: Global Cues; Fed Rate Cut To Drive Market Sentiment

One of the most closely watched global developments is the potential US Federal Reserve rate cut in 2025. Jerome Powell's address at Jackson Hole has sparked optimism in global markets, with many analysts now expecting a 25 basis points cut. This expectation has already started impacting global liquidity trends, pushing US bond yields lower and putting pressure on the US dollar.

Indian markets are expected to take cues from these developments, especially as Foreign Institutional Investors (FIIs) have been net sellers in recent weeks. However, the possibility of a Fed rate cut could reverse this trend, with Foreign Portfolio Investors (FPIs) possibly returning to Indian equities if global liquidity improves.

Russia-Ukraine War: Adding to market tension is the ongoing Russia-Ukraine conflict, which remains unresolved despite multiple diplomatic engagements, including the latest rounds of meetings involving former US President Donald Trump with both Vladimir Putin and Volodymyr Zelensky. Geopolitical uncertainty in Eastern Europe continues to be a significant overhang for global risk assets.

Domestic Factors To Affect Dalal Street This Week: GST 2.0 and Macro Stability Offer Support

Amid global volatility, domestic factors are expected to provide some cushion to Indian equities. According to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, investor confidence is supported by the government's proposed GST 2.0 reforms, along with robust macroeconomic indicators such as stable inflation and strong corporate earnings in key sectors.

"We expect Indian equities to remain supported by optimism around GST 2.0 reforms and domestic macro strength. Globally, clarity on US tariff actions against India and upcoming GDP data from both India and the US will shape investor sentiment," said the expert.

The upcoming GDP data releases from both India and the US will be critical in shaping market expectations for the next quarter. Market participants are also watching for clarity on the US tariff policy on Indian exports, which could significantly affect sectoral outlooks, particularly in manufacturing and IT.

Stock Market Holiday on Ganesh Chaturthi: NSE, BSE Holiday on 27 August

The Indian stock market will remain closed on Wednesday, 27 August 2025, on account of Ganesh Chaturthi, a widely celebrated Hindu festival marking the birth of Lord Ganesha. Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will observe a full-day trading holiday, including in the equity, derivatives, and SLB segments.

The closure aligns with the official list of market holidays issued by the exchanges for 2025. Investors and traders are advised to plan their trades and portfolio activities accordingly, as normal trading will resume on Thursday, 28 August 2025.

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