Domestic markets are likely to see downtrend pressure on the first day of the new fiscal year FY26 amid global headwinds. If trading on Gift Nifty (23,460) is any indication, Nifty will see a gap-down opening of nearly 200 points. Experts believe the mid-and small-cap space will remain under pressure.

Analysts see the focus will be on US President Donald Trump’s tariff measures on April 2. Global investors are keenly watching its pronouncements. Puneet Singhania, Director at Master Trust Group, said: the upcoming week is set to be volatile for global and Indian markets, driven by India-US tariff policy developments, impact of US President Donald Trump announcement of a 25 per cent tariff on finished vehicle imports effective April 3 and US Fed Chair Powell Speech.

Asset allocation will be key

FY26 will be a year of asset allocation where instead of a broad market rally, there will be pockets of opportunities for wealth creation, said Vaibhav Porwal, Co-Founder, Dezerv. Investors should focus on picking assets that reflect their risk appetites, he said, adding while the returns from the equity markets have been between 20-25 per cent in the past year across certain categories, investors are advised to rationalise expectations from the equity markets to about 13-15 per cent.

“Amidst market volatility, investors should stay disciplined and continue with their SIPs. Market corrections let you enter at a lower cost and thus reduce your average cost of investing,” he advised. “If we look at historical market corrections of ~15-20%, the markets have delivered a median return of ~ 15% over the next 3 years. This presents a good opportunity for investors to generate returns in actively managed portfolios,” he further said.

FPI behaviour

According to analysts, foreign portfolio investors’ behaviour will be closely monitored. They have turned buyers in the last few days after draining nearly ₹1.3 lakh crore from India since September.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said: the change in FII strategy from sustained selling to modest buying, which was visible in the week ending March 21, continued with increased intensity for the week ending March 28. Big buying by FIIs during the last several days of March substantially reduced the total FII selling in March to ₹6,027 crore. Since FIIs invested ₹2,055 crore through the primary market, the net FII sell figure for March is down to only ₹3,972 crore, he added.

Going forward, the trend in FII flows will depend mainly on Trump’s reciprocal tariffs expected on April 2. He further said that if the tariffs are not severe, the rally may continue.

According to Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India, turning the tide last week, FPI inflows have started in green, bringing back the cheer in the Indian market despite the last week of the financial year, which usually witnesses substantial profit booking. “The last few trading sessions have been gloomy and volatile for the Indian market. Some of the primary reasons on the macroeconomic front had been the United States’ making announcements for the imposition of reciprocal tariffs, ongoing military tension in the Middle East, rising inflation, low consumption, and higher valuations,” he said.

All eyes are now on the upcoming announcements to be made by the US on likely tariff curbs imposition and potential rate cut by the RBI in its review meeting, he said.