Market Overview
Indian equity benchmarks, such as the Nifty 50, experienced declines of around 0.5%, with the index falling to approximately 25,200, ending an 11-session winning streak due to sharp selloffs in IT stocks triggered by US H-1B visa fee hikes to $100,000. Negative market breadth was evident, with significant foreign institutional investor (FII) outflows, but domestic institutional investors (DIIs) provided support with net buying. Positive factors include robust IPO activity, GST 2.0 reforms reducing tax slabs to boost disposable income and consumption, strong infrastructure sector growth at a 13-month high of 6.3%, and gains in sectors like defence, power, and banking. Global influences are mixed, with Wall Street record highs from Fed rate cuts and tech rallies offset by visa-related uncertainties and geopolitical tensions. The India VIX surged over 5%, indicating heightened volatility, with key support levels for Nifty around 25,000-25,150 and resistance near 25,500-25,700.
Key Sectors in Focus
Information Technology (DOWN)
The IT sector faced significant pressure, with the Nifty IT index plunging nearly 3% due to US H-1B visa fee hikes, raising concerns over margin impacts of 40-200 basis points and potential EPS declines of 2-17% for firms like TCS, Infosys, and Tech Mahindra. However, analysts note reduced visa reliance (3-5% of workforce) and opportunities for offshoring or local hiring, suggesting long-term resilience and buy-on-dips strategies.
Defence (UP)
Defence stocks surged, with gains up to 6%, driven by government initiatives like ₹30,000-80,000 crore drone and warship tenders, plans to increase defence spending to 2.5-3% of GDP, and 75% indigenous procurement. Companies such as Cochin Shipyard and Zen Technologies benefited from order buzz and attractive valuations after corrections.
Infrastructure and Power (UP)
This sector showed strength with core growth at 6.3% in August, major order wins like KEC International's ₹3,243 crore contract, and Adani Power's surge post-stock split and SEBI clearance. GST reforms benefiting coal and cement, along with renewable energy IPOs, indicate expansion opportunities and government support.
Banking and Financial Services (MIXED)
Banking indices had mixed performance, with PSU banks leading gains and private banks facing profit-taking after a rally. Strong credit growth of 11-12%, low NPAs, and DII inflows provided support, but FII outflows and governance risks introduced caution. Fintech firms like PhonePe showed robust growth.
Automotive and Consumer Goods (UP)
GST rate cuts on autos and consumer durables to 5-18% boosted sales by up to 30%, driven by festive season demand and increased disposable income. Stocks like Hero Motocorp and Hyundai Motor India gained, with projections of sustained consumption growth in tier 2-3 cities.
Stock Spotlight
| Company | Movement | Insight |
|---|---|---|
| Adani Power | Surged 15-20% | Adani Power's rally was fueled by a 1:5 stock split, inclusion in Nifty Next 50, SEBI clearing Hindenburg allegations, and Morgan Stanley's overweight rating with targets implying 30% upside, reflecting renewed investor confidence in the energy sector. |
| Nvidia | 4% jump | Nvidia's surge due to a $100 billion investment in OpenAI and chip supply deals drove Wall Street record highs, positively influencing global tech sentiment and modest gains in Asian markets. |
| TCS | 2-3% decline | TCS faced selling pressure from H-1B visa fee concerns, erasing significant market cap, but its reduced visa use and upcoming Q2 results with potential dividends offer recovery prospects. |
| Cochin Shipyard | Up to 6% surge | Cochin Shipyard gained on Navy order buzz and dividend announcements, highlighting strength in defence and shipping sectors amid government infrastructure status grants. |
| Netweb Technologies | 7-21% surge to record high | Netweb's AI GPU orders, including a ₹450 crore contract, drove gains, showcasing growth in India's AI sector with doubled profits and strong investor optimism. |
Economic Indicators
Inflation
Low inflation trends are noted, with GST reforms potentially reducing CPI to 4% or less, supporting possible RBI rate cuts.
Interest Rates
Fed rate cuts boosted global sentiment, with expectations of RBI easing due to low inflation, but INR depreciation risks may delay actions.
Gdp
India's GDP growth is strong, with forecasts of 6.8% in FY26, supported by GST reforms and infrastructure expansion.
Other Relevant Indicators
GST 2.0 reforms expected to inject ₹2-2.5 lakh crore into the economy; core sector growth at 6.3% in August; forex reserves rose to $703 billion; India VIX surged over 5% to around 10.55, indicating volatility.
Global Market Influences
Global factors had a mixed impact: positive cues from US Fed rate cuts and record highs in Wall Street tech stocks like Nvidia and Apple supported gains, but US H-1B visa fee hikes pressured Indian IT sectors, and geopolitical tensions drove oil price volatility. Key markets influencing India include the US, with ongoing trade talks and policy uncertainties, and Asia, where modest gains were seen.
Commodity Trends
Gold (UP)
Gold hit record highs above ₹1,11,000 per 10g, driven by Fed rate cut expectations, geopolitical tensions, and safe-haven demand, with projections for further gains.
Oil (MIXED)
Oil prices edged up on geopolitical risks but faced weekly declines due to oversupply concerns, with Brent around $66-67/barrel, adding volatility for import-dependent India.
Silver (UP)
Silver surged to new peaks, supported by industrial demand from solar and EVs, similar drivers as gold, and supply constraints.
Expert Opinions
Experts express mixed views: bullish on domestic sectors like defence, banking, and consumption due to GST reforms and earnings growth projections of 15-18% by FY27, but cautious on IT from visa fee impacts, advising buy-on-dips strategies. Technical analysts see Nifty targets of 25,700-27,000 if key supports hold, with recommendations to focus on IPOs and sector-specific opportunities amid volatility.
Market Outlook
Short-Term Projection
The short-term outlook is volatile, with Nifty support at 25,000-25,150 and resistance at 25,500-25,700; a break below support could lead to declines toward 25,000, while holds may drive rallies. IT sector pressures from visa issues and global cues will weigh, but domestic catalysts like IPO frenzies, GST boosts, and defence orders provide upside. Investors should monitor US data, RBI policies, and corporate earnings for direction.