Domestic market is expected to open weak amid global uncertainty, geopolitical tension and rising dollar index and interest rates. Besides, RBI policy (on September 30) and F&O expiry (September 29) will keep market volatile this week. Analysts said the relative outperformance of Indian market is likely end to align with the global markets.

"Global cues are expected to dominate this week as well, but RBI policy and September F&O expiry will lead to volatility in our market," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

SGX Nifty at 17,180 indicates that Nifty may see a gap down opening of about one per cent and bears may conquer 17,200 level for Nifty. Equities across Asia-Pacific region paints a pale picture, with Japan's Nikkei, Korea's Kospi and Taiwan's main index tumbling over two per cent; Australia's ASX index plunged nearly 1.8 per cent in early deal. However, Chinese main index and Hong Kong's Hang Seng were up in early deal, amid talk of Chinese central bankers buying stocks.

Firm dollar index

"The tide has finally turned for our markets which had relatively outperformed the global markets in last couple of months. The outperformance was mainly because of the relative strength in our currency, which had consolidated within a range in spite of the rising Dollar Index," said Ruchit Jain, Lead Research,

However, post the US Fed policy outcome, the Dollar Index rose sharply and finally the INR gave a breakout from its consolidation and depreciated sharply to reach 81 mark.

"So once the currency outperformance was over, our markets witnessed selling pressure and as we have seen in history as well, our markets cannot remain decoupled for long in this globalised world," he added.

Global pain

Last week, global equities went into a tailspin with S&P500 and Nasdaq cracking close to 5 per cent each. European equities saw cuts of around 3 to 5 per cent as well, after the US Federal Reserve officials raised interest rates by 75 basis points for a third straight time earlier this week and Chair Jerome Powell implied in hawkish remarks that policymakers were prepared to accept economic pain in exchange for restoring price stability, said Mitul Shah - Head of Research at Reliance Securities.

"If we look at F&O data the short exposure of FIIs in the index future has jumped to 80 per cent indicating sentiments are weak, but the market is hedged. We are heading into expiry weak on a weaker note as the Nifty slipped below the put base of 17,500 where 17,000 is the next base," Santosh Meena added.