Indian shares likely to rebound after selloff, but oil surge may cap gains

Indian stock markets are expected to rebound on Friday after a sharp sell-off pushed them into oversold territory, according to market analysts. Benchmark indices are anticipated to stage a technical recovery, with the Nifty 50 poised for a positive opening. However, the gains may be limited by a surge in oil prices and fresh US regulatory pressure targeting a green-card program heavily utilized by Indian IT outsourcing firms.

At 7:41 a.m. IST on Friday, Nifty futures were trading at 22,379.5, signaling a favorable start to the trading day. The Nifty 50, which closed at 22,231.80 on Thursday, and the Sensex had both experienced a 32-month low in the previous session. The sell-off was driven by mounting concerns over elevated crude prices, rising global bond yields, and a weakening Indian rupee, which had heightened inflation worries following the Reserve Bank of India's hawkish rate hike earlier in the week.

Foreign portfolio investors offloaded a substantial net 129.44 billion rupees worth of Indian equities on Thursday, marking the largest single-day outflow since May 29, 2026. Domestic institutional investors, however, partially offset the outflow by purchasing a net 107.03 billion rupees worth of shares. The decline has driven the benchmarks toward an oversold territory, indicating weak momentum but also suggesting the potential for a near-term technical bounce, according to market analysts.

The drop in stock prices has been further exacerbated by weakness in heavyweight IT stocks. Tata Consultancy Services, the country's largest software company, reported its weakest September-quarter revenue growth in three years, raising concerns about client spending and demand conditions in the sector. This pressure was compounded by the US government's suspension of major IT outsourcing firms from the Permanent Labor Certification Program, a crucial green-card pathway for employment in the United States.

Sumit Singhania, head of research at Bajaj Broking, commented on the situation, stating that Indian IT companies are already facing pressure, and the additional regulatory development adds another layer of uncertainty to the already challenging environment.