Indian equity markets are likely to make gap-down start on Monday following weak global cues as the Iran-Israel/US conflict continued without any signs of a truce. Traders are likely to adopt a wait-and-watch approach ahead of the release of India's Index of Industrial Production (IIP) data for February later in the day. Some cautiousness may come amid continued foreign fund outflows, as foreign institutional investors (FIIs) offloaded shares worth Rs 4,367.30 crore on Friday.

Some of the key factors to be watched:   

Unemployment dips marginally to 3.1% in 2025: A government survey stated that the overall unemployment rate for persons aged 15 years and above in India declined marginally to 3.1 per cent in January to December 2025 from 3.2 per cent a year ago. 

Near-term outlook remains uncertain: The Finance Ministry said that the near-term outlook remains uncertain, with external shocks particularly the West Asia crisis posing downside risks to growth through elevated input costs and potential supply disruptions.

Govt may consider more relief packages for vulnerable sectors if West Asia crisis prolongs: The report said the government may announce more relief packages for vulnerable segments of the economy, including the MSME sector, to help them sustain and keep inflation under check in the domestic market if the West Asia crisis prolongs further.

Piyush Goyal to visit Canada for trade talks: Commerce and Industry Minister Piyush Goyal will visit Canada in May amid ongoing negotiations for a free trade agreement between the two countries. 

India forex reserves drop: The RBI said India’s forex reserves dropped by $11.413 billion to $698.346 billion during the week ended March 20, due to a sharp decline in gold reserves. In the previous reporting week, the overall reserves had fallen by $7.052 billion to $709.759 billion.

On the global front: The US markets ended in red on Friday as the Middle East conflict escalating despite efforts aimed at finding a diplomatic solution. Asian markets are trading in red on Monday following the broadly negative cues from Wall Street on Friday.

Back home, Indian equity benchmarks tumbled over 2 per cent on Friday after a two-day rally, in tandem with a weak trend in global peers, as the US-Iran conflict continues to be the crucial overhang for markets, raising doubts about a de-escalation of the war. Rising crude prices, the rupee's free fall and unabated foreign fund outflows also added to the gloom. Finally, the BSE Sensex fell 1690.23 points or 2.25% to 73,583.22 and the CNX Nifty was down by 486.85 points or 2.09% to 22,819.60. 

Some of the important factors in trade: 

OECD projects India's GDP to grow at 7.6% in FY26, 6.1% in FY27: The Organisation for Economic Cooperation and Development (OECD) has projected India's GDP to grow at 7.6 per cent in the current fiscal and 6.1 per cent in 2026-27.

Govt asks RBI to target retail inflation at 4% till March 2031: The government asked the Reserve Bank to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for another five years ending March 2031.

West Asia conflict to strain India's FY27 fiscal math: Ratings agency ICRA said that a surge in global crude oil and natural gas prices amid the West Asia conflict is likely to complicate India's fiscal position in FY2027, potentially increasing subsidy burdens and pressuring revenues.