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Below the Quote on Daily Market Commentary for July 1st , 2026 By Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd

Indian equities are expected to consolidate with a cautious bias as investors await greater clarity on the US-Iran negotiations and the commencement of June-quarter business updates, which are likely to drive stock-specific action. Resilient domestic fundamentals and easing input costs should provide downside support, although geopolitical developments in West Asia are expected to keep risk appetite in check. Domestic markets recovered on Tuesday, with the Nifty 50 gaining 0.6% to close slightly above the 24,000 mark. The recovery was led by automobile stocks after robust June sales from major manufacturers reinforced demand optimism. Strong dispatches reported by Mahindra & Mahindra, TVS Motor and Tata Motors supported sectoral sentiment, while favourable global cues, stable crude oil prices and selective buying in FMCG stocks further aided the rally. Broader markets also ended higher, with the Nifty Midcap 100 and Smallcap 100 advancing 0.3% each. Realty (+3.6%), FMCG (+2%) and Media (+2%) emerged as the top-performing sectors, while IT (-2%) and Metals (-1%) underperformed. The Nifty IT index extended its losing streak to a fourth consecutive session after KPIT Technologies plunged over 16% following a weaker-than-expected business outlook and reduced spending by key European automotive clients. The negative sentiment spilled over to the broader Information Technology sector, with investors turning cautious ahead of the June-quarter earnings season. Sectoral focus is expected to remain on Aviation, Hotels and Restaurants. Lower Aviation Turbine Fuel (ATF) prices and a Rs183.5 per cylinder reduction in commercial 19-kilogram LPG prices are expected to ease operating cost pressures for aviation and hospitality companies, while the government's withdrawal of temporary restrictions on fuel sales to commercial buyers signals normalisation of domestic supply conditions. Financials are also likely to remain in focus after the RBI's Financial Stability Report reaffirmed the resilience of the banking system, projecting banks' gross non-performing asset ratio to remain below 2%, at 1.9% by March 2028 under the baseline scenario. India's manufacturing activity remained in expansion territory, with the HSBC Manufacturing PMI moderating to 54.2 in June, while easing input costs indicate receding inflationary pressures. Meanwhile, the fiscal deficit stood at 9.6% of the FY27 Budget Estimate at the end of May, indicating a healthy start to the fiscal year. Indian government bonds strengthened, with the benchmark 10-year yield easing to around 6.7% supported by expectations of India's inclusion in the Bloomberg Global Aggregate Bond Index and continued foreign inflows into government securities. Going forward, investor focus will remain on developments in West Asia, June-quarter business updates, energy prices and key domestic macroeconomic indicators

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