Market Overview
Indian equity benchmarks Sensex and Nifty declined for the fourth consecutive session, with Nifty falling to around 25,057, driven by foreign institutional investor (FII) outflows of approximately ₹2,400-₹3,500 crore, weak global cues from US trade tensions, H-1B visa policy concerns, and Fed Chair Powell's inflation warnings. Domestic institutional investors (DIIs) provided support with net buying of around ₹1,200-₹2,600 crore. Broader markets underperformed, with midcap and smallcap indices declining up to 0.98%. Positive factors include strong domestic economic indicators like Q1 FY26 GDP growth of 7.8%, CPI inflation at a 97-month low of 1.55%, GST reforms potentially reducing inflation, and robust IPO activity. Sentiment is mixed, balancing bearish pressures with pockets of strength in sectors like defence, renewables, and FMCG.
Key Sectors in Focus
Information Technology (DOWN)
The IT sector faced significant pressure due to US proposals to hike H-1B visa fees, potentially impacting margins and earnings by 2.6-8.4%. Stocks like Infosys, TCS, and Tech Mahindra declined, with analysts warning of short-term headwinds but expecting gradual recovery from Q3FY26.
Defence (UP)
The sector showed strength with mega contracts like HAL and BEL securing ₹1.6 lakh crore for IAF upgrades, L&T-BEL partnerships for the AMCA programme, and 'Make in India' initiatives driving growth. Stocks like Swan Defence surged, though short-term caution persisted with minor declines in some names.
Renewable Energy (UP)
Positive developments included Waaree Energies' ₹300 crore investment in lithium-ion cells, IREDA's capital raising, and government schemes worth ₹70,000 crore for shipping and solar projects. Stocks like CESC and Premier Energies gained on analyst upgrades, despite volatility in names like IREDA.
FMCG (UP)
The sector demonstrated resilience with GST cuts on hair oils boosting demand, stocks like Hindustan Unilever rising on strong results, and Reliance's investments. It provided a defensive cushion amid broader market declines.
Pharmaceuticals (UP)
Positive news included Glenmark Pharma's $1.1 billion cancer drug deal, Lupin's US FDA approval for an HIV drug, and initiatives for affordable generics. This drove investor interest in innovation and regulatory wins.
PSU Banks (UP)
PSU banks rallied on potential government plans to increase foreign investment limits, supported by record profits and low NPAs. The Nifty PSU Bank index gained, indicating improved financial health.
Automotive (MIXED)
The sector saw profit-booking and declines in stocks like Tata Motors and Ashok Leyland, but positive factors included GST cuts, strong performance from Maruti Suzuki, and EV expansion plans from companies like Minda Corp.
Real Estate (DOWN)
The realty sector was a top loser, with indices dropping up to 2.5% due to weak volume growth, affordability concerns, and broad selling pressure, though long-term prospects remain for select players.
Stock Spotlight
| Company | Movement | Insight |
|---|---|---|
| Tata Steel | Reached a 52-week high | Investment of ₹4,054 crore in its subsidiary signals corporate confidence and focus on international operations, attracting investor attention. |
| Tata Investment Corporation | Surged 10-25% on stock split announcement | The 10:1 stock split and dividend drove sharp gains, boosting retail investor interest and trading volumes. |
| Glenmark Pharma | Not specified, but notable deal | $1.1 billion cancer drug partnership positions the company for significant revenue growth in oncology. |
| Adani Group stocks | Surged up to 30% after SEBI clean chit | SEBI's dismissal of Hindenburg allegations renewed confidence, narrowing the wealth gap with Mukesh Ambani and boosting energy and logistics segments. |
| Intel | Rose 6.4-22% on Nvidia investment | Nvidia's $5 billion stake for custom CPU/GPU manufacturing revived optimism for a turnaround, despite past losses. |
| Minda Corp | Surged 9-10% on growth targets | Ambitious revenue target of ₹17,500 crore by 2030 and EV expansions drove investor confidence in auto components. |
| JSW Steel | Rose to record high | Hit all-time high supported by dividend announcements and acquisitions, reflecting strong investor sentiment. |
Economic Indicators
Inflation
CPI inflation at a 97-month low of 1.55%, with GST reforms expected to reduce it further by up to 1 percentage point. Key US inflation data awaited for Fed rate cut clues.
Interest Rates
Mixed Fed signals on rates affecting global markets; RBI may cut rates if inflation stays low, with S&P forecasting a 25 bps cut. US rate cut probabilities high for October.
Gdp
Q1 FY26 GDP growth at 7.8% YoY, supported by strong domestic demand. OECD raised 2025 growth forecast to 6.7%, S&P maintained 6.5% for FY26.
Other Relevant Indicators
FIIs net sold ₹2,400-₹3,500 crore in equities, DIIs net bought ₹1,200-₹2,600 crore. Rupee depreciated to 88.70-88.90 per USD due to outflows and US policies. Services PMI at 15-year high of 62.9, cement volume growth 8.5% in early FY26.
Global Market Influences
Global influences were predominantly negative, with US market declines, Fed Chair Powell's warnings on inflation and valuations, trade tensions, H-1B visa fee hikes, and geopolitical risks pressuring Indian markets. Positive cues included HSBC upgrading Indian equities to 'overweight' with a Sensex target of 94,000 by 2026, tech rallies in Asia, and expectations of US rate cuts supporting commodities.
Commodity Trends
Gold (UP)
Hit record highs domestically and globally (above ₹1,14,000 and $3,700-3,800/oz) on Fed rate cut expectations, geopolitical tensions, and central bank demand, though short-term profit-taking occurred.
Crude Oil (UP)
Prices rose 2-2.5% on supply fears from Iraqi Kurdistan delays, Russian tensions, and inventory drops, though bearish risks from potential oversupply exist.
Copper (UP)
Surged due to supply disruptions from Freeport Indonesia, weak dollar, and improved Chinese demand, with a structural deficit noted.
Silver (UP)
Hit all-time highs supported by rate cut bets and industrial demand, with potential undervaluation relative to gold.
Expert Opinions
Analysts expressed mixed views: HSBC projected a 13-15% Sensex rally to 94,000 by 2026 citing valuations and policies, while others warned of short-term volatility due to stretched valuations, FII outflows, and global risks. Experts advised 'buy on dips' strategies with stop-losses, highlighted IT sector recovery from Q3FY26, and recommended caution in high-PE sectors. Technical support for Nifty is key at 25,000, with breaks potentially leading to declines to 24,700-24,900.
Market Outlook
Short-Term Projection
The short-term outlook is cautious with volatility expected. Nifty is testing critical support at 25,000; a break below could lead to declines to 24,700-24,900, while a rebound above 25,300 may trigger recovery. Factors to watch include FII/DII flows, global cues from Fed policies and US tariffs, sector-specific developments like defence and renewables, and corporate earnings. Domestic strengths like GDP growth and low inflation may provide stability.