Mumbai – Indian equity benchmarks Sensex and Nifty continued their upward trajectory, logging a fifth straight day of gains on Friday. Both indices ended the week with a strong performance, driven by firm global cues, a stronger rupee, and notable buying in information technology (IT) and financial stocks.
The BSE Sensex jumped 557 points, closing the session at 76,906, after briefly hitting a fresh intra-day high of 77,042. Across the week, the Sensex soared 3,077 points, reflecting a 4.17% gain. The broader Nifty 50 also closed firmly higher, rising 160 points to settle at 23,350, just below its day’s high of 23,403. The Nifty posted a 4.26% weekly jump, adding 953 points.
Financials, IT Stocks Anchor the Market Rally
Investor sentiment was lifted by strong performances in heavyweight stocks, particularly from the banking and IT sectors. NTPC topped the list of Sensex gainers, advancing 3.3% on the day. Bajaj Finance, Sun Pharma, Larsen & Toubro, Kotak Mahindra Bank, Nestle India, Tata Motors, and Axis Bank also closed with notable gains.
On the flip side, Mahindra & Mahindra lost over 1%, while Tata Steel, Infosys, Titan, and Bajaj Finserv slipped into negative territory, capping some of the benchmark’s upward momentum.
Broader Market Participation Strengthens
Investor interest spilled over into the broader markets. The BSE MidCap index gained more than 1%, while the SmallCap index outperformed with over 2% gains during intra-day trade, reflecting wider market participation and increased investor confidence.
Sectoral Snapshot: Oil & Gas, Power, and Healthcare Shine
Among the sectoral indices, the BSE Oil & Gas index surged more than 2%, leading the pack. Power, Healthcare, and Financial Services also registered strong gains. However, the Consumer Durables index saw a 0.8% dip, weighed down by profit booking. The Metal index also ended lower by 0.4%, reflecting subdued global metal prices and selective selling in key stocks.
Foreign Inflows and a Stronger Rupee Add Tailwind
The Indian rupee recorded a sharp appreciation, strengthening by 40 paise, or 0.46%, to close at 85.94 per US dollar. This surge was attributed to renewed foreign institutional investor (FII) inflows, improving global risk sentiment, and dollar weakness following the US Federal Reserve’s latest policy stance.
The Federal Reserve’s decision to keep rates unchanged and indicate the possibility of rate cuts later in the year weakened the dollar, indirectly supporting emerging market currencies, including the rupee.
Jateen Trivedi, Analyst at LKP Securities, commented on the currency movement: “The Fed’s dovish tone has significantly pulled the dollar lower, while the strength in Indian equity markets has attracted foreign capital, bolstering the rupee further.”
Gold Eases on Rupee Strength and Stable Risk Sentiment
Gold prices faced headwinds amid rupee appreciation and improving global risk sentiment. On the Multi Commodity Exchange (MCX), gold prices corrected below ₹88,100, testing the critical ₹88,000 level.
Trivedi added, “Gold is facing resistance due to profit booking, and with reduced global uncertainty, the safe-haven premium is under pressure. We may see gold testing support zones around $2,950–$2,965 before any renewed buying interest emerges.”
Market Dynamics Signal Bullish Undertone
The Indian equity market’s sustained upward momentum comes on the back of resilient corporate earnings, improving macroeconomic indicators, and relatively supportive global cues. FIIs, which had turned net sellers in earlier sessions, have resumed buying, offering a vital boost to liquidity and confidence.
The rebound in IT stocks, which had underperformed due to global uncertainty and slowing demand, indicates a potential rotation in market leadership. Investors appear to be rebalancing portfolios as the earnings season nears completion and attention shifts to macroeconomic data and global monetary trends.
Key Drivers of the Week’s Rally
The Sensex and Nifty’s robust weekly performance can be traced to multiple factors:
- A stable US Federal Reserve outlook that eases fears of aggressive monetary tightening.
- Renewed FII interest, reflecting confidence in India’s economic outlook.
- Strong performance by large-cap financials, particularly private sector banks.
- Rebound in IT majors, following signs of improving US tech demand.
- Firm global markets, with easing concerns over inflation and geopolitical tensions.
These elements have combined to create a favorable environment for Indian equities, positioning them as one of the top performers among emerging markets this week.
Earnings and Macro Triggers Ahead
Market watchers are now turning their attention to upcoming quarterly earnings, especially from IT, FMCG, and banking sectors, for cues on forward guidance and growth expectations. Additionally, inflation data, monsoon progress, and any fresh developments on the global geopolitical front will remain key triggers for short-term market direction.
India’s retail inflation has remained within the Reserve Bank of India’s (RBI) comfort zone, and any moderation in food and fuel prices could further reinforce the market’s positive sentiment. RBI’s policy stance in the upcoming review, amid the Fed’s dovish signals, will be closely monitored by investors for rate direction clarity.
Valuations and Volatility: Analysts Advise Caution
While the rally has lifted benchmarks to record highs, analysts caution that valuations are turning rich, particularly in sectors where earnings may not justify the price moves. The India VIX, a gauge of market volatility, has edged higher, suggesting that while bullishness persists, volatility may re-emerge around key macro events or global developments.
Market experts suggest a stock-specific approach, advising investors to be selective and focus on quality names with strong balance sheets and growth visibility, rather than chasing momentum.
Domestic Institutional Investors Remain Steady
On the domestic front, mutual funds and insurance companies continued to absorb supply and support market breadth. Domestic institutional investors (DIIs) have played a stabilizing role, particularly during bouts of FII selling earlier in the month.
This coordinated domestic participation, coupled with foreign inflows and improving earnings visibility, is helping Indian markets maintain a relatively stable trajectory amid global uncertainties.
Currency Outlook Remains Stable
The rupee’s appreciation this week is being seen as a sign of relative strength among emerging market currencies. Analysts expect the currency to remain in a narrow range in the short term, with upside potential capped by importer demand for dollars and any fresh global headwinds.
Trivedi explained, “If FIIs continue to show interest and oil prices remain benign, we could see the rupee holding around 85.50–86.00 levels against the dollar. However, traders should remain cautious of sudden dollar strength in case of geopolitical flare-ups or inflation surprises in developed markets.”
Global Cues Remain Critical
Global markets are currently being guided by central bank policies, inflation trends, and geopolitical developments. With the European Central Bank also signaling rate stability and China’s stimulus measures supporting sentiment, Indian equities are benefiting from a global wave of optimism.
However, analysts remain watchful of any flare-up in geopolitical tensions, particularly in the Middle East and East Asia, which could quickly reverse the risk-on sentiment prevailing in equity markets.
Markets End the Week on a High Note, But Cautious Optimism Prevails
Indian equity markets have ended the week with solid gains, powered by a revival in foreign flows, a stronger currency, and sectoral tailwinds in financials and IT. As benchmark indices hover near all-time highs, investor focus will shift to earnings visibility, valuation comfort, and macroeconomic stability. While the undertone remains bullish, cautious optimism is expected to guide market strategies in the sessions ahead.
