Summary of this article
Fed rate hike bets could keep global markets volatile this week
Rising US bond yields may pressure Indian equities
Higher crude oil prices remain a key risk for India
Indian equity markets ended the week on a cautious note, extending their corrective phase as high crude oil prices, renewed geopolitical tensions and uncertainty over global interest rates weighed on investor sentiment. Benchmark indices recovered on the last trading day of the previous week, September 4, 2026, and broke a four-session losing streak, but the rebound remained limited amid continued foreign portfolio investor (FPI) selling and concerns over rising energy prices.
The Nifty 50 fell around 1.15 per cent during the week to close at 23,897.70, while the Sensex declined nearly one per cent to 76,515.43.
Both indices recorded their fourth consecutive weekly decline, highlighting continued weakness in the broader market trend. However, the broader market was relatively resilient, with the Nifty Smallcap 100 index gaining marginally while the Nifty Midcap 100 index slipped.
High crude oil prices and renewed geopolitical tensions remained the biggest headwinds for Indian equities.
Metal stocks and some private lenders bucked the broader weakness and gained towards the end of the week. Selling pressure, however, remained strong in IT, auto and pharma stocks as investors booked profits amid concerns over global demand, high bond yields, and rising input costs.
Autos were among the worst-hit sectors, while IT stocks remained vulnerable to movements in US Treasury yields, which continue to shape equity valuations and demand for growth-oriented stocks.
Stock Market Cues To Watch This Week
Markets are likely to remain sensitive to global monetary policy, crude oil prices, and geopolitical developments as trading resumes on September 7 and continues through September 11, 2026.
1. Fed Rate Hike Bets
Investors will track the US Federal Reserve’s rate outlook after persistent inflation and higher bond yields kept markets under pressure last week. Dovish comments from Fed Governor Christopher Waller briefly reduced expectations of an immediate hike and triggered a relief rally in global equities.
However, the August jobs report has added uncertainty. Nonfarm payrolls rose by 162,000, well above expectations, following an upwardly revised gain of 21,000 in July. The strong data could strengthen the case for a rate hike at the Fed’s September 15-16 meeting.
President Donald Trump, reacting to the data on Truth Social, said, "This strong number is nearly TRIPLE the predictions of the Bloomberg survey's so-called “Economists.” In another post, he added, “Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!"
Trump has repeatedly called for lower rates and said, "High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!" He also repeated: "A STRONG COUNTRY MEANS A LOWER INTEREST RATE - IT'S A BETTER CREDIT…Very simple!"
CME’s FedWatch tool puts the probability of a 25-basis-point hike at 59.4 per cent, which would take rates to 3.75-4.00 per cent from the current 3.50-3.75 per cent range. Any fresh signals on Fed policy could influence sentiment on Dalal Street this week.
2. US Bond Yields
Treasury yields rose on September 4 after a stronger-than-expected August jobs report.
The two-year Treasury yield rose over four basis points to 4.377 per cent, its highest since January 2025. The 10-year yield, a benchmark for mortgages, auto loans and credit card debt, climbed over two basis points to 4.784 per cent, while the 30-year yield was little changed at 5.245 per cent.
Yields across major economies have climbed to multi-year highs amid oil-driven inflation, tighter monetary policy and worsening fiscal conditions. A further rise could increase pressure on emerging market equities, including India.
3. US Dollar
The dollar rose after the stronger-than-expected August jobs data lifted bets on a September rate hike from the Fed, though it gave up some of its early gains as the session wore on. The dollar index, which measures the greenback against a basket of the world’s six major currencies, rose 0.16 per cent to 99.16 on September 4, 2026.
The dollar to rupee pair rose 0.21 per cent to 94.48 on the same day. Ajit Mishra, senior vice president, research, Religare Broking, said, "Any renewed increase in bond yields or the US dollar could put additional pressure on emerging markets.”
4. Crude Oil Price
Crude oil has rallied sharply over the past few weeks, and that trend is one of the biggest risks on the radar this week. Brent crude has climbed over $96 a barrel, its highest level in nearly one and a half months, while US WTI has moved above $90 a barrel.
The main driver behind the rally is renewed tension between the US and Iran, which has revived concerns over global oil supplies and tanker movements through the Strait of Hormuz, a key route for global energy trade.
Recent exchanges of strikes and threats aimed at strategic assets in the Gulf have raised fears of a wider conflict. Investors worry that prolonged hostilities could hit oil production, export infrastructure or shipping routes in the region.
Rising oil prices carry inflation risk with them, and that could go on to shape the Fed's future rate decisions, which is why Indian markets will track crude as closely as domestic cues this week.
