Market Summary

Markets ended the week on a firm footing, supported by resilient domestic macroeconomic indicators, healthy GST collections, improving industrial activity, and continued expansion in both manufacturing and services. Expectations of a more accommodative global monetary policy following softer-than-expected U.S. labour market data further strengthened investor sentiment.

Despite mixed global cues and some moderation in India’s services sector activity, benchmark indices remained resilient. The Nifty gained 0.90% to close at 24,270.80, while the Sensex advanced 0.86% to settle at 77,763.91. Broader markets outperformed the benchmarks, with the Midcap and Smallcap indices rising 1.18% and 1.12%, respectively, reflecting improving risk appetite beyond large-cap stocks.

Key Market Drivers

Domestic macroeconomic indicators remained encouraging throughout the week. Industrial production accelerated to 5.1% in May from 4.9% in April, driven by broad-based manufacturing growth and robust electricity generation. Strong capital goods output continued to signal healthy investment activity.

GST collections further reinforced the strength of the domestic economy, rising 13.9% year-on-year to ₹1.95 lakh crore in June—the fastest annual growth in 13 months—supported by resilient domestic consumption and robust import-related revenues.

Business activity continued to expand, albeit at a slower pace. The Manufacturing PMI eased to 54.2 from 55.0, while the Services PMI moderated to 57.4 from 59.8 in May. Although both readings softened, they remained comfortably in expansion territory, indicating sustained economic momentum despite softer client demand.

India’s foreign exchange reserves increased by $963 million to $672.59 billion during the week ended 19 June, providing continued support to external stability despite a decline in foreign currency assets.

Globally, investor sentiment improved after weaker-than-expected U.S. labour market data strengthened expectations of a more accommodative Federal Reserve policy. Meanwhile, easing inflation in the Eurozone, stronger economic growth in the UK, and improving manufacturing activity in China added to the constructive backdrop, although geopolitical developments in West Asia remained an important monitorable.

Sectoral Snapshot

Sectoral participation remained broad-based, with buying interest spread across cyclical and domestic-oriented sectors. Realty emerged as the standout performer, surging nearly 8% during the week and signalling the possibility of a trend reversal after nearly two years of corrective consolidation. Pharma, FMCG, and metal stocks also posted healthy gains, supported by improving market sentiment and stock-specific buying.

In contrast, banking and energy stocks witnessed mild consolidation following their recent outperformance, ending the week with modest losses.

Key Events to Watch

The coming week will be driven by the onset of the earnings season, alongside key domestic financial indicators and evolving global developments.

Investors will closely monitor the quarterly results of TCS on July 9, with particular focus on management commentary regarding demand trends, discretionary spending, and AI-led business opportunities. In addition, bank credit growth, deposit growth, and the latest foreign exchange reserves data will be watched for further insights into domestic liquidity conditions and the health of the banking sector.

Globally, markets will continue to track developments surrounding the U.S.–Iran dialogue in Doha and the normalisation of shipping activity through the Strait of Hormuz, given their implications for crude oil prices and global risk sentiment. Investors will also closely assess evolving expectations regarding the U.S. Federal Reserve’s policy trajectory.

Technical Outlook

Nifty

The Nifty has strengthened its technical structure after reclaiming the 24,000 mark and sustaining above its short- and medium-term moving averages. A decisive move above the 24,450 level could extend the ongoing rally towards the 24,600–25,000 zone.

On the downside, the 24,100–23,900 zone is expected to provide immediate support, followed by a stronger support base around 23,600.

Bank Nifty

Bank Nifty continues to exhibit relative strength and remains one of the key drivers of the broader market. Sustaining above the 57,000 level has reinforced the positive technical outlook.

A sustained breakout above 58,800 could trigger the next leg of the rally towards 60,000, with the record high near 61,700 emerging as the next medium-term target. On the downside, the 56,300–57,000 zone is expected to provide strong support during any corrective phase.

Market Breadth

Market breadth improved further during the week, with the Smallcap index outperforming the benchmark indices. The broader participation indicates improving investor confidence and expanding market leadership beyond heavyweight stocks.

The combination of resilient domestic macro fundamentals, improving global liquidity expectations, and sustained participation across broader market segments suggests that the ongoing recovery is becoming increasingly broad-based.

Strategy Ahead

The market continues to benefit from a favourable domestic macroeconomic backdrop, improving earnings visibility, and expectations of a more supportive global liquidity environment.

Going forward, the earnings season is likely to take centre stage, alongside geopolitical developments, in shaping near-term market direction.

Investors should continue to focus on fundamentally strong companies with healthy balance sheets, improving earnings visibility, and relative strength. Banking, pharma, realty, and defence remain among the preferred sectors along with the broader indices, given their sustained relative outperformance in recent weeks.

At the same time, maintaining disciplined position sizing and prudent risk management remains essential, as global developments and earnings-related reactions could continue to drive short-term volatility.

Ajit Mishra – SVP, Research, Religare Broking Ltd.