If one lists out the instances when geopolitics played an important part in deciding market trends, the last 7-10 days will be very high on that chart. From India coming together with Russia and China at the SCO in China, Narendra Modi’s symbolic handshake with Chinese President Xi Jinping to Donald Trump’s comment on the three leaders on social media and rising investor concern about tariffs, the world order is at an inflection point for investors. 

As a Bloomberg report highlights, for investors, the symbolism comes at a critical time.Indian markets have been underperforming global peers. The Nifty is down 1% on a 3-month basis. However, the MSCI EM Index is up nearly 8% in the same period. The main Chinese Index, Shanghai Composite is up over 1% In fact, the Nifty 50 is up just 4.6% this year, trailing the 19% advance in the broader MSCI Emerging Markets Index. The market is clearly unsure and concerned about what Trump might do next. 

As a result, key positive triggers like the GST new rates and revamp of the GST structure and a stunning 7.8% GDP print for Q1 failed to lift investor enthusiasm in a sustained manner. 

Here is a look at the 7 most important cues that investors are likely to watch out for as we get set for another data-heavy trading week –

1. India-China ties – Evolving dynamics

The SCO meeting has no doubt kindled hopes of India-China relations thawing. Though improved ties between the two big economies and neighbours are mutually beneficial, the gains for India may have a slight edge. While India exported $14.2 billion to China in FY25, it imported products worth $113.5 billion.

Jasmine Duan, senior investment strategist at RBC Wealth Management in Hong Kong, in a comment to Bloomberg, explained that “Improved Sino-Indian relations may benefit the Indian stock market more significantly, as India is currently the one facing the 50% tariff hike.”

“For Chinese stocks, the impact is likely to be indirect and marginal at best, making it difficult to drive a major market trend,” she said.

Valuation-wise the Chinese markets are at the moment at a significant advantage over India. The key Chinese and Hong Kong Indices are valued at almost half of India’s valuation, making them way more attractive buys for FIIs.

2. FII outflows continue – What’s the big driver?

The FIIs continued their selling spree in India, selling equities worth Rs 5,666 crores in the cash market. This takes the total FPI selling in 2025 so far up to Rs 1,76,606 crores. This is significantly higher compared to the Rs 1,21,210 crore outflow by FIIs in 2024. This has been a period which has also seen record buying by DIIs. 

Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments explained that, “sustained massive DII buying is enabling FPIs to encash at high valuations and take the money to cheaper markets like China, Hong Kong, South Korea. Even the optimism generated by the GST reforms didn’t restrain the FPIs, who sold on every day of September so far.”

He added that “apart from the high valuations, the Trump tariff-related uncertainty also is weighing on FIIs. The market also is a bit concerned about what Trump might do next. There are some concerns that the unpredictable US president may even impose tariffs on IT services from India. The continuing uncertainty is impacting market sentiments.”

3. Donald Trump’s next move

From posting “Looks like we’ve lost India and Russia to deepest, darkest China” to saying he will “always be friends” with Modi, US President Donald Trump’s comment don’t just make headlines but also, in many ways, are being seen as potential cues on ties between US-India. PM Modi’s response to Trump’s ‘always friends’ comment is also another important cue for investors, as all eyes are on what happens next on the Tariff front

4. US Tariff concerns

The US President had also mentioned that trade negotiations with India are “going well”. Earlier, Piyush Goyal, Minister for Commerce and Industry, had also emphasised in an interview with ANI that, “I don’t think there’s any need to panic. We should allow the negotiations to happen.” According to Ajit Mishra – SVP, Research, Religare Broking, “Any updates on the India-US trade deal could provide further support to market sentiment.”

5. All eyes on important data this week

It is a data-heavy week for markets, both on the domestic front as well as globally. The August inflation data on September 12 will be closely tracked in the wake of the GST new rates. Along with this, the bank credit and deposit growth and forex reserves are going to be monitored closely, especially given the recent underperformance of banks. 

Globally, key U.S. data releases include consumer inflation expectations, PPI, CPI, jobless claims, and consumer sentiment. These are expected to be critical points that may help in shaping the Fed’s Policy. 

Mishra added that, “Despite optimism around policy reforms and supportive domestic factors, markets appear to be entering a consolidation phase, cautious given lingering tariff concerns and persistent foreign institutional outflows. That said, trading opportunities remain across sectors. Participants are advised to align their positions accordingly, with a focus on risk management.”

6. Inflation data on September 12

The inflation data will be a crucial one ahead of the RBI Policy Meeting in October. The GST rate revamp is expected to provide impetus to consumption, and the expectation is that the Indian central bank may follow the Fed and also look at easing rates further. In this context, the inflation trend might be a key factor to watch. 

7. OPEC may raise oil output further from October

A latest report on Reuters indicates that OPEC+, which includes the Organization of the Petroleum Exporting Countries plus Russia and other allies, has reversed its strategy of output cuts from April and has already raised quotas by about 2.5 million barrels per day. As per Iraq, it is likely to agree to further increase in oil output on Sunday while probably slowing the pace of increases from October compared with recent months because of weakening global demand. 

At their last meeting in August, OPEC+, which pumps about half of the world’s oil, raised production by 547,000 bpd for September. Brent crude futures closed at $65.50 a barrel on Friday, down 2.2%, due to a weak US jobs report and expectations of an OPEC+ output hike. This is still up from a 2025 low of near $58 seen in April.