Indian financial markets do not operate in isolation. Every trading day, before the NSE and BSE open at 9:15 am IST, traders and fund managers around the world have already been active for hours. Asian markets — Japan's Nikkei, Hong Kong's Hang Seng, and others — open in the early morning hours IST and provide the first set of cues. By the time Indian markets open, these exchanges have already reacted to overnight developments from the US, and their direction often shapes the opening mood in India. A sharp fall in the Nikkei, for instance, can lead to a cautious start on Dalal Street, even if there is no specific India-related news driving it.

India's 10-year bond yield rose to a two-month peak on Friday, in part because investors were repositioning ahead of a speech by the US Federal Reserve Chair — a clear example of how a single overseas event can move domestic markets.

The influence of the US market is particularly significant. The S&P 500 and Nasdaq are the world's most closely watched equity benchmarks, and their overnight performance is among the first things Indian market participants check each morning. Beyond equities, the US Federal Reserve's interest rate decisions carry enormous weight globally. When the Fed raises rates, it tends to strengthen the US dollar and can pull capital away from emerging markets like India, as investors chase higher returns in dollar-denominated assets. Conversely, signals of rate cuts or a pause can bring foreign capital back into markets like India. Today's session illustrated this dynamic clearly: Indian government bond yields rose to a two-month high, and global bond yields also moved, as investors repositioned ahead of a speech by Fed Chair Kevin Warsh at Jackson Hole — an event happening overseas but with direct implications for Indian debt markets.

Commodity prices are another key transmission channel. India imports a large share of its crude oil needs, so a move in Brent crude — like the 2.35 percent decline seen today — directly affects India's import bill, inflation expectations, and the current account. Gold prices, similarly tracked globally, influence domestic gold demand and related financial products. The US dollar's strength or weakness feeds into the rupee exchange rate, which in turn affects import costs and the earnings of export-oriented companies such as IT firms. Understanding these connections helps explain why Indian markets sometimes move sharply even on days when there is little domestic news — the impulse often originates thousands of kilometres away.