A Fortnight of Highs, Hurdles and Hopes

Indian benchmark indices delivered a mixed performance over the last fortnight. The first week saw a strong upward momentum, with back-to-back gains pushing the indices closer to their record highs. However, this bullish sentiment faded in the following week as multiple headwinds, coupled with profit booking, pared the earlier advances. The initial rally was fuelled by optimism surrounding a potential India-U.S. trade agreement, a strengthening rupee, and favourable macroeconomic indicators. These positive cues added to the existing cheer from the RBI’s earlier rate cut and liquidity infusion, which continued to support investor confidence.

Meanwhile, the primary market was buzzing with activity—seven mainboard IPOs and numerous SME offerings garnered robust subscription levels and encouraging listing gains, adding to the overall market enthusiasm. However, sentiment took a hit when SEBI issued an interim order barring U.S.-based quant trading firm Jane Street from participating in Indian markets, citing alleged manipulation in index options on expiry days. This regulatory action rattled the derivatives space, leading to sharp declines in shares of key brokerage and platform companies such as Angel One, BSE, CDSL, and Nuvama Wealth.

Additionally, F&O trading volumes dropped significantly, reflecting the market’s immediate reaction to Jane Street’s exit. Despite this brief turbulence, benchmark indices closed the fortnight on a cheerful note, with the BSE Sensex and Nifty 50 gaining 1.24 per cent and 1.39 per cent, respectively. Broader markets outperformed the Large-Cap space, reclaiming ground near their previous peaks. The BSE Midcap Index surged 2.93 per cent, while the BSE Small-Cap Index climbed 4.68 per cent during the same period. On the sectoral front, investor optimism was widespread, with most major indices ending in the green—except for real estate.

Oil and gas stocks rallied, driven by crude oil prices falling below USD 70 per barrel due to easing geopolitical tensions, which in turn boosted refining margins for OMCs. Strong foreign portfolio investment (FPI) inflows further lifted sentiment in this space. Similarly, metal stocks rose on the back of improved global risk appetite and consistent demand outlook from China, enhancing export opportunities. Realty stocks, however, witnessed profit-booking after a short-lived rally post-RBI policy. Despite lower interest rates, housing demand remained weak, weighed down by rising unsold inventory.

The RBI’s shift from an ‘accommodative’ to ‘neutral’ stance also tempered hopes of further policy support. While foreign institutional investors (FIIs) remained net sellers during the fortnight with moderate outflows, domestic institutional investors (DIIs) provided strong support, infusing around ₹20,000 crore. The outcome of the India-U.S. trade deal will be a crucial growth trigger or potential drag for the markets in the near term, though its direction remains uncertain at the time of writing. Stay tuned for further updates!