Storm Clouds, Steady Markets

The fortnight started on a cautious note for global markets as geopolitical tensions resurfaced in the Middle East. The U.S. carried out strikes at multiple locations in Iran, signalling a collapse of the peace understanding reached earlier. In response, Iran launched retaliatory attacks on military bases across the region, raising fears of a wider conflict.

The renewed hostilities triggered a fresh surge in crude oil prices, with Brent crude trading close to USD 90 per barrel at the time of writing. As India remains heavily dependent on crude oil imports, the sharp rise in oil prices added to concerns over inflation and economic stability.

The impact on equity markets was immediate. The Nifty VIX, widely regarded as the market’s fear gauge, jumped nearly 25 per cent at the beginning of the fortnight as investors rushed to factor in heightened geopolitical risks. Despite the challenging global backdrop, the benchmark indices remained largely range-bound during the fortnight. The BSE Sensex and Nifty 50 gained 0.50 per cent and 0.26 per cent, respectively, reflecting the absence of any decisive directional trend.

Investor caution was also evident in the broader markets. The BSE 250 SmallCap Index declined 0.35 per cent, while the BSE 150 Mid-Cap Index managed to post a modest gain of 0.86 per cent.

Sectoral performance remained mixed. The only notable development was the IT sector’s strong resurgence, as it emerged as the top performer during the fortnight, supported by a strong start to the Q1 earnings season. Better-than expected results from TCS and Tech Mahindra, coupled with HCL Tech’s large deal win and growing expectations of U.S. Federal Reserve rate cuts, boosted investor confidence. Having underperformed for much of the year, IT stocks also witnessed value buying, making the sector a preferred defensive play amid renewed geopolitical tensions.

India’s retail inflation, measured by the Consumer Price Index (CPI), accelerated to 4.38 per cent in June 2026, up from 3.93 per cent in May, breaching the Reserve Bank of India’s 4 per cent target for the first time in 17 months.

Geopolitical tensions fuelled crude oil prices and volatility, while the IT resurgence and domestic inflows helped stabilise markets.

Wholesale price inflation also surged to 9.87 per cent in June, driven by a sharp increase in the prices of both food and non-food items.

While foreign institutional investors (FIIs) remained net sellers, the intensity of their selling eased considerably compared with the previous fortnight, indicating a gradual improvement in sentiment. Meanwhile, domestic institutional investors (DIIs) continued to act as a stabilising force, infusing ₹18,000 crore into equities and providing strong support to the markets. Quarterly earnings have a notable impact on the market.

For detailed insights into the Q1 results, refer to the special story on the same. Stay tuned for further updates!