Weekly Market Update: Firm End Despite Tensions

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

Market Summary

Indian equity markets closed the week higher, maintaining their recovery momentum even as geopolitical tensions rose, crude oil prices stayed high, and uncertainty lingered over the global interest‑rate outlook. Optimism was bolstered by strong Q1 FY27 results from IT firms — TCS alone added close to 10% for the week — renewed buying in financial shares, and steady domestic fundamentals. Still, advances were tempered as investors weighed the impact of higher energy costs, a weaker rupee, and unfolding events in West Asia.

As a result, the main indexes posted solid weekly gains: the Nifty 50 rose about 0.53% to 24,334.30, and the Sensex climbed roughly 0.75% to 78,151.45. Meanwhile, the broader market saw modest profit‑taking after its earlier outperformance, with both the Midcap and Smallcap indices finishing slightly lower.

Key Market Drivers

Escalating tensions between the United States and Iran pushed crude oil prices higher, with Brent briefly breaching US$85 a barrel as worries over possible supply interruptions via the Strait of Hormuz grew. The spike in energy costs renewed fears of imported inflation, a widening current‑account deficit for India, and higher input costs for companies.

Even with these external pressures, domestic sentiment stayed largely positive. Investors kept favoring sectors showing earnings resilience and improving visibility, while hopes that major central banks might ease monetary policy later in the year added to risk appetite.

Corporate earnings were the main driver of market mood during the week. Robust quarterly results from top IT players — especially Tech Mahindra and TCS — strengthened confidence in the sector and lifted expectations for technology spending, even as concerns about the global economy began to ease.

Sectoral Snapshot

Sector performance was mixed, with buying led by earnings and rotation driving stock‑specific moves. IT led the pack after delivering better‑than‑expected quarterly results and receiving upbeat commentary from major firms.

Conversely, oil & gas and aviation shares traded cautiously amid renewed crude‑oil volatility, while FMCG stocks saw selective profit‑booking after their recent rally.

Overall market participation softened during the week, with mid‑ and small‑cap stocks experiencing mild consolidation after having outperformed the benchmarks for several weeks.

Key Events to Watch

The week ahead is likely to be shaped by corporate earnings, domestic macro data releases, and global developments.

On the home front, investors will watch India’s foreign‑exchange reserves, bank credit growth, services PMI and deposit growth figures for clues about liquidity and the health of the financial system.

The progress of the southwest monsoon and kharif sowing will also be key, given their influence on rural demand, food inflation and the RBI’s future policy stance.

Globally, market participants will continue to monitor West Asian geopolitical tensions and their effect on oil prices and risk sentiment. Movements in the US dollar index and Treasury yields remain vital for foreign institutional investor flows into emerging markets.

Technical Outlook

Nifty

The Nifty stays comfortably above its short‑ and medium‑term moving averages, despite occasional profit‑taking during the week. Strong participation from heavyweight sectors — especially IT and financials — helped lift the index, and the overall trend remains upbeat.

Immediate support lies in the 24,000–23,800 band, with a firmer floor near 23,650. On the upside, the 24,600–25,000 zone acts as the near‑term barrier; a clear break above that range could open the path toward the 25,200 level.

Bank Nifty

Bank Nifty continues to show relative strength and remains a key pillar of the broader market’s resilience. It has held above all its major moving averages while keeping a clear bullish structure.

A sustained move past 58,800 could spark the next leg of the rally toward 60,000, whereas the 57,300–56,700 area should provide solid support during any pull‑back.

Market Breadth

Market breadth stayed generally healthy despite modest profit‑booking in the wider market. While the benchmark indexes kept outperforming, the temporary consolidation in mid‑ and small‑cap stocks looks more like profit‑taking than a sign of deteriorating fundamentals.

The resilience of the broad indexes, even amid heightened global uncertainty, indicates that domestic liquidity remains supportive and investor confidence is improving. Ongoing sector rotation suggests that stock selection and earnings visibility will likely drive performance in the near term.

Strategy Ahead

Heightened geopolitical uncertainty, swings in crude oil prices, and shifting global monetary‑policy expectations are likely to keep market volatility elevated in the short term.

Looking ahead, the continuing Q1 FY27 earnings season will remain the main catalyst for sector rotation and stock‑specific opportunities. Investors should focus on fundamentally sound companies with strong earnings visibility and improving relative strength, rather than chasing momentum‑driven spikes.

Sectors such as banking, financial services, information technology, capital goods, infrastructure, defence, and select healthcare appear attractive. At the same time, a selective stance is warranted in areas directly exposed to crude‑oil price swings and global macro‑economic uncertainty.

Although the medium‑term outlook stays positive, as benchmark indices approach important resistance levels, there remain chances to build quality positions on meaningful dips instead of aggressively chasing higher prices.