Nifty, Sensex see firm recovery after RBI's support to rupee
Indian equity benchmarks posted a firm recovery, sustaining gains for the second week as investors looked past early inflation worries, especially after the central bank’s special dollar window for oil marketing companies helped the rupee rebound.
Nifty added 2.78 per cent during the week and gained 0.65 per cent on the last trading day to reach 23,146.
At close, Sensex was up 413 points or 0.56 per cent at 74,729. It gained 3.11 per cent during the week.
Market sentiment was dented earlier in the week by consumer inflation hovering near the upper end of the Reserve Bank of India’s tolerance band and a hotter?than?expected wholesale price index print that pushed benchmark bond yields to multi?year highs.
The central bank raised the daily cash reserve ratio maintenance requirement to absorb surplus liquidity, adding to caution. Market confidence, however, improved after the central bank’s special dollar window for oil marketing companies and tighter hedging norms drove a rupee-rebound, analysts said.
"Expectations of a review of LTCG tax and STT, softer crude prices and easing bond yields further revived risk appetite, prompting investors to tilt towards counters with strong Q2FY27 business updates, though the rally remained concentrated in large-caps, with mid-caps posting modest gains and small-caps ending marginally lower," they added.
"Participants should remain selective, maintain disciplined position sizing and favour a hedged approach amid elevated macroeconomic and earnings-related uncertainty," the experts said.
Information technology (IT) sector emerged as the standout performer on robust earnings and upbeat management commentary, while healthcare and pharmaceuticals lagged as investors favoured sectors with stronger near-term earnings visibility.
Meanwhile, fast?moving consumer goods stocks came under pressure amid concerns over margin compression from elevated input costs.
Broad market indices performed largely in line with the benchmark indices as Nifty Midcap100 added 0.58 per cent and Nifty Smallcap100 dipped 0.12 per cent during the week.
In addition, foreign institutional investors (FIIs) turned net buyers of Rs 11.66 billion in Indian equities on Friday after overall selling eased sharply this week as market sentiment improved.
FIIs remained net sellers for the ninth straight week but their weekly selling moderated to Rs 89.91 billion from Rs 302.94 billion the previous week. On the other hand, domestic institutional investors (DIIs) stayed net buyers for a ninth consecutive week at Rs 78.13 billion, though they were net sellers of Rs 36.61 billion on Friday.
The sustainability of the recovery will hinge on earnings growth broadening beyond IT with revenue and margin delivery across financials, consumption and industrials under close scrutiny, analysts said.
Investors are keen on India's October PMI that will offer insight into domestic demand momentum, while US jobless claims and Japan's inflation print will shape global rate expectations.
