Indian equity markets are likely to make negative start on Monday, amid escalating tensions between the US and Iran in the Middle East. Traders are likely to adopt a wait-and-watch approach ahead of the release of HSBC Composite PMI Final later in the day. Moreover, sentiments may remain subdued due to persistent outflows by foreign institutional investors (FIIs).

Some of the key factors to be watched:

Moody's cuts India FY27 GDP growth forecast: Moody's Ratings has slashed India's economic growth estimates for the current fiscal to 6 per cent from 6.8 per cent earlier, saying the ongoing conflict in West Asia will moderate growth momentum and raise inflation risks. 

West Asia conflict may impact India’s exports: Central Commerce Secretary Rajesh Agrawal said that if the West Asia conflict continues, India's exports to other parts of the world will also be impacted. He added that Indian exports during the last financial year were expected to remain on a positive trajectory despite the crisis.

India’s forex reserves drop by $10.29 billion to $688.06 billion: The Reserve Bank of India (RBI) said that India's forex reserves dropped by $10.288 billion to $688.058 billion during the week ended March 27.

FPIs extend sell-off in April: Foreign investors continued to exit Indian equities, withdrawing Rs 19,837 crore ($2.1 billion) in the first two trading sessions of April, weighed down by the West Asia conflict, rising crude oil prices, and persistent rupee depreciation.

India, UK FTA may come into force in next 30 to 45 days:  Commerce and Industry Minister Piyush Goyal said that the India-UK free trade agreement (FTA), signed in July last year, is likely to come into force in the next 30-45 days.

On the global front: The US markets ended mostly higher on Thursday after Iran’s deputy foreign minister announced that Iran was drafting a protocol with Oman to manage traffic through the Strait of Hormuz. Asian markets are trading mostly in green on Monday following the mixed cues from Wall Street on Thursday.

Back home, Indian equity benchmarks, after starting the trading day in deep red, bounced back and pared all of their losses to end Thursday’s session in the positive territory on strong value buying in IT, TECK and Realty shares. Earlier in the day, markets witnessed a sharp decline after US President Donald Trump said the United States would continue to attack Iran, including energy and oil targets over the next few weeks, and did not commit to a specific timeline to end the war. Finally, the BSE Sensex rose 185.23 points or 0.25% to 73,319.55 and the CNX Nifty was up by 33.70 points or 0.15% to 22,713.10.     

Some of the important factors in trade: 

Crisil flags moderation in banks' credit growth in FY27 amid West Asia conflict: Domestic rating agency Crisil in its latest report has said that banks' credit growth is likely to moderate marginally in the current financial year (FY27) and delinquencies would rise amid uncertainties stemming from the ongoing West Asia conflict.  

External headwinds drag India's manufacturing PMI to 53.9 in March: According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in March from 56.9 in February, marking its lowest level since June 2022. 

RBI comes out with additional measures for ADs amid sharp depreciation of rupee: After reviewing evolving market conditions, the Reserve Bank of India (RBI) has come out with further measures aimed at authorised dealers (ADs) in response to the sharp depreciation of the rupee. The measures are effective immediately.