On Friday, Indian markets closed with significant losses as concerns rose ahead of the SEBI’s deadline for disclosure norms from Foreign Institutional Investors (FIIs). Today, the markets are expected to start on a negative note as global fears of a U.S. economic downturn weighed on Wall Street, pulling down bond yields and commodity prices, as investors sought safer assets. The focus will be on the upcoming GST Council meeting later today, where key issues such as the taxation of insurance premiums and suggestions from the GoM on rate rationalization will be discussed. Additionally, the GST fitment committee will present its report on GST implications for life, health, and reinsurance premiums.

Despite the negative outlook, some positive movement could be seen later due to foreign fund inflows. Foreign investors poured close to Rs 11,000 crore into Indian equities in the first week of the month, supported by a resilient Indian market and hopes of U.S. rate cuts. This follows a period in April-May when Foreign Portfolio Investors (FPIs) had withdrawn Rs 34,252 crore, but since June, they have resumed buying.

Investors may also take note of data from the Reserve Bank of India (RBI) showing that the country's forex reserves surged by $2.299 billion, reaching a new high of $683.987 billion for the week ending August 30. Additionally, defence stocks may see some action as the market opportunity for Indian defence firms is predicted to grow at a 14% CAGR through FY2024 to FY2030, driven by the government's focus on indigenisation and export opportunities. Power stocks are also expected to gain attention as a private report highlighted the substantial growth potential in India's power generation and transmission sectors.

In the U.S., markets took a sharp downturn on Friday after the jobs report indicated a slowing labor market but left uncertainty about the Federal Reserve's next steps regarding interest rate cuts. Asian markets followed suit, mostly trading in red on Monday, after China’s Consumer Price Index (CPI) for August rose by just 0.6%, missing forecasts due to declines in transportation and home goods prices.

Returning to India, equity benchmarks fell sharply on Friday, tracking global market weakness ahead of U.S. job data, which could influence the Federal Reserve’s upcoming decision on interest rates. The markets saw a gradual decline throughout the session, with investors cautious ahead of the GST Council meeting, which is expected to discuss four options on the tax treatment of health insurance—potentially costing the exchequer between Rs 650 crore and Rs 3,500 crore. Foreign fund outflows further dampened sentiment, with FIIs pulling out Rs 688.69 crore in Indian equities on September 5.

Towards the end of the session, market pressure increased as sectors across the board saw selling. Concerns were also heightened after Minister Nitin Gadkari noted that India, which imported 87.7% of its crude oil in 2023-24, would struggle to reduce crude imports by 25%. Meanwhile, a report from the Boston Consulting Group (BCG) and FICCI projected that India’s financial services sector must grow 20-fold for the country to reach its $30 trillion GDP target by 2047. Finally, Singapore's Ministry of Trade and Industry announced that India and Singapore had signed a Memorandum of Understanding (MoU) for cooperation in developing a semiconductor ecosystem. 

At the end of the day, the BSE Sensex declined by 1,017.23 points, settling at 81,183.93, while the CNX Nifty dropped 292.95 points, closing at 24,852.15.