Indian equity markets are likely to open higher on Monday, emboldened by upbeat global sentiment, the signing of the India–New Zealand Free Trade Agreement (FTA), and Sun Pharma's blockbuster acquisition of Organon, analysts said.

"Indian markets are poised to open higher on positive global cues, buoyed by the signing of the India–New Zealand Free Trade Agreement and Sun Pharma's landmark US$11.75 billion takeover of Organon," said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Global macros and mega‑cap earnings in focus

A busy week lies ahead for global markets, with the Federal Reserve policy meeting, advance GDP data, core PCE inflation, and the US Manufacturing PMI headlining the economic calendar, Vakil noted.

On the earnings front, results from Microsoft, Alphabet, Amazon, and Meta—collectively representing roughly one‑quarter of the S&P 500’s market cap—will be watched closely. Their performance is seen as critical to sustaining the recent rally, especially as earnings season approaches its midpoint.

Mega‑cap technology continues to carry the load, with the so‑called “Magnificent Seven” expected to post average Q1 earnings growth of 22.8%, compared with just 10.1% for the remaining 493 constituents of the S&P 500. That gap underscores the continued dominance of large‑cap tech in driving global equity markets.

Geopolitics and energy markets remain fragile

While the Middle East ceasefire holds, the Strait of Hormuz remains closed, keeping global energy markets on edge. Oil prices have surged, with Brent crude moving past $100 per barrel, weighing on the Indian rupee, which has again breached ₹94 per US dollar.

"The Middle East ceasefire holds, but the Strait of Hormuz remains closed, keeping global energy markets on edge. A diplomatic resolution still appears the most likely outcome, though meaningful progress has yet to materialise," Vakil added.

Markets have been pricing out Middle East ‘tail risk’ in recent weeks, with global equities fully recouping the March sell‑off. Yet that rapid recovery leaves stocks vulnerable in the near term should diplomatic talks hit a setback.

Fed outlook and rate‑cut expectations

Interest rate futures markets are pricing in a 99% probability that the Fed will hold rates unchanged at the conclusion of its two‑day meeting on Wednesday—a near‑certainty that reflects broad consensus for a pause after recent cuts.

Global markets are also watching the expected nomination of Kevin Warsh as Jerome Powell's successor at the Fed. The prospect is prompting traders to reassess the pace of rate cuts later this year, particularly as core PCE inflation remains well above the 2% target.

India growth, currency and industrial data

The surge in crude prices and a contraction in core industrial sectors have prompted Moody’s to cut its FY27 GDP growth forecast for India to 6%, a move that could linger on investor sentiment despite the upbeat global backdrop.

With the rupee again testing ₹94 per US dollar, the Reserve Bank of India may need to balance its anti‑inflation stance with the risks of further currency depreciation, especially if global oil prices remain elevated and geopolitical tensions persist.

India–New Zealand FTA and export boost

Domestically, India and New Zealand are set to formally sign their long‑discussed Free Trade Agreement today.

Under the pact, all 8,284 Indian export products will receive duty‑free access to the New Zealand market, a significant boost for Indian exporters in sectors like textiles, agri‑processed goods, engineering products, and pharmaceuticals.

The FTA is expected to drive bilateral trade flows and give Indian manufacturers a more level‑playing field in a niche but high‑value market, analysts said.

Sun Pharma's US$11.75‑billion Organon deal

In the corporate space, Sun Pharmaceutical Industries has announced a definitive agreement to acquire all outstanding shares of US‑based women’s health and specialty pharmaceuticals firm Organon for US$14.00 per share in an all‑cash transaction, valuing the enterprise at US$11.75 billion.

The merger is set to place Sun Pharma among the top 25 global pharmaceutical companies, with combined annual revenue of roughly US$12.4 billion. The combined entity will be a top‑3 global player in the women’s health segment and the seventh‑largest global biosimilar player.

The deal is expected to expand Sun Pharma’s footprint in patented and specialty‑branded drugs, diversify its revenue base, and strengthen its position in North America and Europe—regions that contribute a major share of global pharma sales.

Nifty’s recent correction

Domestic markets, however, ended last week on a weak note. The Nifty 50 extended its losing streak to three consecutive sessions amid broad‑based selling, led by IT stocks. Despite a late‑day recovery, the benchmark index closed 275 points lower at 23,897, marking a weekly loss of 1.90%.

Next immediate support for the Nifty is seen around 23,790, followed by 23,550, while 24,200 will be a key level to watch for a clear bullish trend reversal, traders said.

Opening sentiment

With global indices trading in the green, the India–New Zealand FTA set to be inked, and Sun Pharma’s headline acquisition providing a positive dose of corporate news, the local market is expected to open higher on Monday.

Still, investors will remain watchful of the Fed's rate stance, crude price trends, and the rupee’s trajectory, which could sway intraday momentum.