The Nifty has gone back to around 23,000 after the turbulence in October and now investors are closely watching the US mid‑term elections that are scheduled for 3 November. The way this election is expected to impact the Indian stock market is a topic that keeps getting debated in many market circles, but the focus of the discussion is mostly about indirect effects.
In the week ended 30 October, the Sensex climbed 1,335.7 points, and the Nifty rose 453.1 points, as reported by Free Press Journal. This uptick was a welcome change for many investors which had seen the markets swing up and down throughout the month.
Foreign portfolio investors (A foreign portfolio investor (FPI) is an overseas entity registered with SEBI that buys Indian shares and bonds for returns without taking control. Read the full meaning of FII and FPI) shifted their strategy in the last sessions of October. They purchased Indian equities worth about Rs 6,300 crore between 26 and 30 October, after an outflow of about Rs 2,700 crore the week before. These stronger flows helped the Nifty to reclaim the 23,000 level.
The month began with a weak tone for markets. September delivered the sharpest monthly drop of the year for both the Sensex and the Nifty, and October, though volatile, finished with a net gain, TradingView News said.
Analysts are saying that a shift in US policy towards India will not directly decide how the Indian market reacts to the result. According to a TradingView News report on a research note from Emkay Global, the impact will be mainly on Indian equities through crude oil prices, the dollar and US bond yields. Thus many investors are focusing more on these three factors than on the battle between the two US parties.
Why crude, the dollar and yields matter more than the result
For an Indian investor, there are three paths that work in a fairly straightforward manner. India imports most of the crude oil it uses, so a rise in oil price increases the import bill, tightens the rupee, and pushes domestic inflation higher. Companies that depend on fuel, airlines, paint manufacturers, chemical producers, generally feel the cost climb first.
Dollar matters because foreign funds first convert their money into rupees before buying Indian shares. When the dollar gets stronger, the rupee value of their holdings drops, and many funds cut down their exposure to emerging markets like India.
US bond yields which are the returns on government bonds in the United States, work the same way. When these yields rise, the safe returns in America become more attractive for global funds, and a part of the money that had gone to Indian equities can go back to the US.
The price of crude has become the factor that most market watchers keep an eye on. As per TradingView News, crude was trading above 100 dollars a barrel in late October. Its movement after the election will hinge on the US‑Iran standoff and on the Strait of Hormuz, the narrow sea route through which a large share of the world’s oil supply flows.
EMKAY, the broker, thinks that crude may not go down after the midterms. Its logic is that the expected political limits on President Donald Trump could alter how he handles the Iran conflict, and a new approach does not necessarily lead to lower prices. This point was reported by TradingView News.
Alongside this, there is the query on the conduct of global equities after earlier midterm elections. Historically, the S&P 500, which is the major index for large US companies, has gained about 6% in the 60 trading days following the midterms. Some investors are following this trend and are expecting a comparable rise in global markets, India included.
Emkay, however, argues that this cycle is different from earlier ones, and it gives three reasons. Valuations in the US market are already strong, financial conditions have become tighter, and there is geopolitical uncertainty. According to same report, these three factors can reduce the support that markets normally receive after the election.
The contrast is important for Indian equities because the money that moves into or out of Indian shares depends largely on how global investors feel about risk. If the US market does not repeat its usual post-midterm strength, foreign funds may find less reason to add to their Indian holdings, even when the domestic data is steady.
Many families which invest via mutual funds and A SIP is a method of investing a fixed amount in a mutual fund scheme at regular intervals, usually monthly, by automatic bank debit. Read the full meaning of SIP are only tracking these developments by watching the daily movements of the Sensex and the Nifty. The real causes behind those swings, however, are largely outside India, they are found in oil markets, currency markets and US bond trading.
Foreign investors: heavy selling, a late turn
Foreign selling has been the main worry for Indian equities through October. As per Free Press Journal, FPIs pulled Rs 34,843 crore out of Indian equities during the month, and this was the second straight month of heavy selling by them.
Data from Paterson Capital shows how quickly the money had started leaving. In the first fortnight of October, FPIs withdrew $5.04bn from Indian equities, and their equity assets under custody stood at $694bn in the middle of the month. Many investors in the domestic market were watching these withdrawals every day, as each large outflow was seen in the Nifty on the same session.
The last week of October changed the situation. Buying of about Rs 6,300 crore in the final five sessions was enough to turn the trend of earlier weeks, and the Free Press Journal report says this improvement helped Nifty to come back to the 23,000 level. Investors who had been hearing only negative news on foreign flows found the late buying as a relief.
October totals still to be settled
The October total itself is not final, and a second Free Press Journal headline on the same day put the outflow for the month at Rs 52,100 crore.
The same difference appears in the figure for the full year. The article carrying the lower October number puts the outflow for 2026 at Rs 2.95 lakh crore, while the related headline puts it at Rs 3.12 lakh crore.
Such differences are common in the first days after a month ends. Provisional numbers are often collected from different sources and on different cut-off dates, and the final depository data is released only after this. Investors who follow FPI flows closely are therefore waiting for that data before treating any one total as the correct one.
Such differences are common in the first days after a month ends. Provisional numbers are often collected from different sources and on different cut-off dates, and the final depository data is released only after this. Investors who follow FPI flows closely are therefore waiting for that data before treating any one total as the correct one.
Tariffs, RBI and company results in the background
If the Democrats win the mid‑term elections, they could start scrutinising President Trump’s tariffs and spending more closely, according to a Kotak Neo report. The Democratic party may want to review the tariffs or even limit President Trump’s power to impose them. For Indian exporters this creates a cloud of uncertainty about trade policy, although it does not mean immediate changes in the tariff rates.
Domestic indicators are closely monitored by investors too. Indian CPI inflation is at 5.54%, its highest in about 22 months, and wholesale price inflation is at 11.39% for September 2026. An HSBC report expects another 25 bp rate hike by the RBI in December, after the RBI raised the repo rate by 25 bp to 5.50% on 7 October, but the RBI has not confirmed any December move.
Company earnings kept arriving in that time frame. Jio Platforms has disclosed a 13.7% jump in its consolidated net profit, rising to Rs 8,389 crore, its inaugural quarterly statement since listing, reported by Free Press Journal.
The Indian exporters are now focusing on the US result, mainly because it could give clues about the future of trade policy. The Kotak Neo report does not show any immediate changes in the tariff rates and a review of the tariffs, if it happens at all, will need time to go through the US Congress. Exporters who have large sales in the American market will probably keep their planning very careful till the situation becomes clearer.
Alongside this, investors in India are watching the domestic numbers. Consumer inflation is at its highest in about 22 months and wholesale inflation is at 11.39%, and families are noticing the higher prices in their monthly household spending. An HSBC report links this to an expected 25 bp rate hike by the RBI in December.
Corporate results are continuing to come in the middle of these worries. Jio Platforms, in its first quarterly result since it got listed, reported a higher consolidated net profit, and the Free Press Journal report on the result was among the more upbeat news for investors in the last week of October.
The direction of oil will depend on the US-Iran standoff and the situation at the Strait of Hormuz. The final depository data on October FPI flows is also still to be released, and it will settle the difference between the totals reported so far.
