Consolidation Amid Chaos

Steady rates offered stability, though downgraded growth projections and higher inflation clouded the overall market outlook.[EasyDNNnews:PaidContentStart]

Following a phase of broadbased selling across market capitalisation segments and sectors in the preceding fortnight, domestic equities witnessed relatively calmer trading over the last two weeks. Yet, the respite failed to revive investor confidence, as caution continued to dominate market sentiment. The benchmark BSE Sensex and Nifty 50 remained under pressure for most of the period, closing with losses of 1.68 per cent and 1.49 per cent, respectively. The broader market painted a mixed picture, with the BSE 150 Mid-Cap Index registering marginal declines, while the BSE 250 Small-Cap Index stood out by delivering gains of 1.53 per cent.

Sectoral movements were largely muted, reflecting a market in consolidation mode as investors await stronger cues to determine the next directional trend. FMCG and oil & gas were among the sectors that continued to face significant selling pressure. FMCG stocks have been under pressure due to concerns over elevated input costs and uneven rural demand. Investors are also closely monitoring the impact of weatherrelated disruptions, including the potential effects of El Nino, which could influence agricultural output, rural incomes and consumption trends.

Persistent geopolitical tensions have reignited concerns over potential supply disruptions and a rise in crude oil prices. The resulting uncertainty surrounding refining margins, input costs and inflationary pressures has dampened investor sentiment, leading to increased caution towards oil and gas stocks. Information technology stocks witnessed a roller-coaster ride during the period, rallying sharply initially before surrendering all their gains within just two trading sessions. The sharp reversal mirrored the sell-off in global technology stocks, particularly in AI and Semiconductor companies.

Investor attention remained firmly focused on the outcome of the RBI’s Monetary Policy Committee meeting. The central Bank kept the repo rate unchanged at 5.25 per cent while maintaining its neutral stance. It also revised its FY27 GDP growth forecast downward to 6.6 per cent from 6.9 per cent and raised its inflation estimate to 5.1 per cent. The rupee witnessed a notable recovery over the last fortnight, supported by a combination of favourable factors, including the relative easing of crude oil prices and the RBI’s proactive measures to ensure adequate liquidity and contain excessive volatility in the currency market.

In a move aimed at enhancing the attractiveness of Indian debt markets, the government exempted foreign institutional investors (FIIs) and the Bank for International Settlements from capital gains and interest Tax on investments in government securities. On the institutional front, foreign institutional investors (FIIs) remained net sellers, offloading equities worth around ₹54,800 crore. In contrast, domestic institutional investors (DIIs) continued to support the markets, with strong inflows of nearly ₹59,700 crore, helping stabilise sentiment. Stay tuned for further updates!

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