A Fortnight of Two Halves

Markets struggled amid rising geopolitical tensions before stronger earnings and easing crude oil prices turned sentiment around.

After witnessing weakness during the opening week amid escalating geopolitical tensions in the Middle East, Indian equity markets staged a strong recovery in the latter half of the fortnight as global risks eased and the June quarter earnings season gathered momentum. Investor sentiment improved sharply after reports of progress on a U.S.-brokered ceasefire involving Hamas reduced concerns over a wider regional conflict. [EasyDNNnews:PaidContentStart]

The easing of tensions also led to a decline in crude oil prices, providing relief to global markets. Brent crude, which had surged above USD 102 per barrel during the fortnight on fears of supply disruptions through the Strait of Hormuz, cooled to around USD 95 per barrel by the close of the period.

Despite the sharp swings witnessed during the fortnight, benchmark indices ended with limited changes. The BSE Sensex remained largely flat, while the Nifty 50 gained 0.26 per cent. Broader markets continued to outperform, with the BSE 150 Midcap Index closing near its all-time high, reflecting sustained investor interest in the broader market. Meanwhile, the India VIX declined around 9 per cent during the fortnight, indicating that market volatility eased considerably after geopolitical concerns subsided.

Sectoral performance remained mixed. The BSE Auto Index emerged as the top-performing sector, gaining around 6 per cent on expectations of healthy monthly sales numbers from leading manufacturers such as Maruti Suzuki India, Mahindra & Mahindra, Tata Motors, and TVS Motor Company. The IT sector recovered significantly, supported by encouraging June quarter earnings from Tata Consultancy Services (TCS), HCLTech, Tech Mahindra, LTIMindtree, and LTTS, which reinforced confidence in the sector amid improving expectations for global technology spending.

Institutional flows reflected the improvement in market sentiment during the latter half of the fortnight. While foreign institutional investors (FIIs) remained net sellers overall, with net outflows of ₹1,232.12 crore, they turned net buyers during the final four trading sessions.

Domestic institutional investors (DIIs) continued to lend strong support, investing ₹12,622.05 crore and comfortably absorbing foreign selling. Improved global risk appetite also supported the Indian rupee, which appreciated against the U.S. dollar during the period, while the dollar index eased to close around 95.38.

While geopolitical developments dominated market sentiment during the first half of the fortnight, easing global tensions, lower crude oil prices, and encouraging corporate earnings helped markets regain momentum. With the earnings season still underway and institutional support remaining strong, investors will continue to monitor corporate management commentaries and global developments for cues on the market’s near-term direction.

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