Top News

By Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd.

Market Summary

Indian equity markets ended the week on a firm footing, extending their recovery despite heightened geopolitical tensions, elevated crude oil prices, and persistent uncertainty surrounding the global interest-rate outlook. Sentiment remained supported by encouraging Q1 FY27 earnings from the IT sector as TCS closed with nearly 10% of weekly gains, renewed buying interest in financial stocks, and resilience in domestic economic fundamentals. However, gains remained measured as investors continued to assess the implications of rising energy prices, currency weakness, and evolving developments in West Asia.

Consequently, the benchmark indices posted healthy weekly gains, with the Nifty 50 advancing around 0.53% to close at 24,334.30, while the Sensex gained nearly 0.75% to settle at 78,151.45. In contrast, broader markets witnessed mild profit booking after their recent outperformance, with both the Midcap and Smallcap indices ending the week marginally lower.

Key Market Drivers

Renewed geopolitical tensions between the United States and Iran resulted in another sharp rise in crude oil prices, with Brent crude briefly moving above the US$85 per barrel mark amid concerns over supply disruptions through the Strait of Hormuz. The sharp increase in energy prices revived concerns regarding imported inflation, India’s current account deficit, and corporate input costs.

Despite these external headwinds, domestic market sentiment remained broadly constructive. Investors continued to favour sectors demonstrating earnings resilience and improving visibility, while expectations that major central banks could gradually move towards a less restrictive monetary policy later in the year also supported risk appetite.

Corporate earnings emerged as the primary driver of market sentiment during the week. Strong quarterly performances from leading IT companies, particularly Tech Mahindra and TCS, reinforced confidence in the sector and improved expectations regarding technology spending amid easing concerns over the global economic outlook.

Sectoral Snapshot

Sectoral performance remained mixed, with earnings-led buying and rotational participation driving stock-specific action across the market. IT emerged as the top-performing sector after better-than-expected quarterly earnings and encouraging management commentary from major companies.

On the other hand, oil & gas along with aviation stocks traded with a cautious bias amid renewed volatility in crude oil prices, while FMCG stocks witnessed selective profit booking following their recent outperformance.

Broader market participation moderated during the week, with midcap and smallcap stocks witnessing mild consolidation after outperforming benchmark indices over the past several weeks.

Key Events to Watch

The upcoming week is expected to be driven by a combination of corporate earnings, domestic macroeconomic releases, and global developments.

On the domestic macroeconomic front, market participants will closely monitor India’s foreign exchange reserves, bank credit growth, services PMI and deposit growth data for fresh insights into liquidity conditions and the health of the financial system.

Progress of the southwest monsoon and kharif sowing activity will also remain important monitorables, given their implications for rural demand, food inflation, and the Reserve Bank of India’s future policy stance.

Globally, investors will continue to track developments surrounding geopolitical tensions in West Asia and their impact on crude oil prices and global risk sentiment. Movements in the US dollar index and Treasury yields will remain critical for foreign institutional investor (FII) flows into emerging markets.

Technical Outlook

Nifty

The Nifty continues to trade comfortably above its key short and medium term moving averages despite intermittent profit booking during the week. Healthy participation from heavyweight sectors, particularly IT and financials helped gaining the index, while the broader trend remains positive.

Immediate support is placed in the 24,000–23,800 zone, followed by a stronger base around 23,650. On the upside, the 24,600–25,000zone remains immediate hurdle on the higher sideand a decisive breakout above this range could pave the way towards the 25,200 mark.

Bank Nifty

Bank Nifty continues to demonstrate relative strength and remains one of the primary contributors to the broader market’s resilience. The index has sustained above all its major moving averages while maintaining a well-defined bullish structure.

A sustained move above 58,800 could trigger the next leg of the rally towards 60,000, while the 57,300–56,700zone is expected to provide strong support during any corrective phase.

Market Breadth

Market breadth remained broadly healthy despite mild profit booking in the broader market. While benchmark indices continued to outperform during the week, the temporary consolidation in midcap and smallcap stocks appears to be largely profit-driven rather than indicative of any deterioration in the underlying trend.

The resilience in broader indices, despite elevated global uncertainty, suggests that domestic liquidity remains supportive and investor confidence continues to improve. The ongoing rotation across sectors indicates that stock selection and earnings visibility are likely to remain the primary drivers of performance in the near term.

Strategy Ahead

Elevated geopolitical uncertainty, volatility in crude oil prices, and evolving global monetary policy expectations are likely to keep market volatility elevated over the near term.

Going forward, the ongoing Q1 FY27 earnings season will remain the primary catalyst for sectoral rotation and stock-specific opportunities. Investors should continue to focus on fundamentally strong companies with robust earnings visibility, and improving relative strength rather than chasing momentum-driven rallies.

Among sectors, banking, financial services, information technology, capital goods, infrastructure, defence, and select healthcare stocksappear suitable. At the same time, a selective approach is advisable in sectors directly impacted by crude oil price volatility and global macroeconomic uncertainty.

While the medium-term outlook remains positive, benchmark indices approaching important resistance levels, still offering opportunities to gradually accumulate quality stocks on meaningful declines rather than aggressively chasing higher prices.