Market Summary

Markets ended the week marginally lower, snapping a four-week winning streak amid renewed geopolitical tensions in West Asia and a sharp spike in crude oil prices. Markets started the week on a positive note, supported by easing crude prices, encouraging Q1 business updates, improving monsoon progress, and broad-based buying. However, sentiment weakened mid-week following escalating Iran–US tensions, triggering a sharp sell-off before benchmark indices recovered a significant part of the losses over the final two sessions.

The rebound was aided by improving global sentiment and better-than-expected earnings from TCS, which provided a positive start to the Q1 FY27 earnings season. Despite the decline in benchmark indices, broader markets remained resilient and continued to outperform.

For the week, the Sensex declined 0.25% to close at 77,569.39, while the Nifty slipped 0.26% to settle at 24,206.90. In contrast, the Midcap and Smallcap indices gained over 1% each, reflecting sustained stock-specific buying beyond the benchmark universe.

Key Market Drivers

Geopolitical developments remained the primary driver of market sentiment during the week. Fresh tensions between Iran and the United States resurfaced after Iran reportedly targeted U.S. military installations across Gulf states in retaliation for recent American strikes. The renewed conflict briefly pushed Brent crude above the $80 per barrel mark before prices cooled towards $76 by the end of the week, easing some concerns over imported inflation and external sector risks.

On the domestic front, attention shifted to the progress of the southwest monsoon. Kharif sowing remained nearly 20% below last year’s levels due to delayed rainfall across key agricultural regions. With June witnessing one of the driest spells in decades, concerns over crop output and food inflation resurfaced, making the upcoming inflation data particularly significant.

Corporate earnings also influenced market sentiment. TCS reported broadly in-line quarterly results, helping ease concerns over the corrective phase in the IT sector. Investors also closely tracked management commentary for insights into demand trends, discretionary spending, and AI-related opportunities.

Sectoral Snapshot

Sectoral performance remained mixed, with stock-specific action dominating market activity. Realty emerged as the top-performing sector, followed by IT and metals, supported by improved sentiment and selective buying.

On the other hand, FMCG, auto, and energy stocks witnessed volatility, largely due to fluctuations in crude oil prices and profit-taking after recent gains.

Broader markets continued to outperform the benchmark indices, highlighting sustained investor interest in quality mid-cap and small-cap companies with strong earnings potential.

Key Events to Watch

The coming week will be crucial from both a macroeconomic and corporate earnings perspective.

Domestically, investors will closely monitor June CPI inflation, WPI inflation, unemployment data, trade balance figures, and the latest foreign exchange reserves. These releases will provide valuable insights into inflation trends, economic momentum, and external sector stability.

The Q1 FY27 earnings season will gather pace, with management commentary expected to play a pivotal role in shaping sectoral trends and earnings expectations.

Globally, developments surrounding the Iran–US conflict and their impact on crude oil prices will remain key monitorables. Investors will also track global risk sentiment and its implications for foreign portfolio flows into emerging markets.

Technical Outlook

Nifty

The Nifty witnessed heightened volatility during the week but managed to recover from lower levels, indicating buying interest on declines. The index continues to trade above its key medium-term moving averages, suggesting that while momentum has moderated, the broader trend remains positive.

Immediate support is placed in the 23,800–24,000 zone, followed by a stronger support base around 23,650. On the upside, the 24,400–24,600 zone remains the immediate resistance, and a decisive breakout above this range could pave the way towards the 25,000 mark.

Bank Nifty

Bank Nifty continues to exhibit relative strength despite the recent corrective phase. The index remains comfortably above its key moving averages, indicating that the broader trend remains constructive.

A sustained move above 58,800 could trigger the next leg of the rally towards 60,000, while the 56,400–57,300 zone is expected to provide strong support during any corrective phase.

Market Breadth

Market breadth remained healthy despite the weakness in benchmark indices. Mid-cap and Small-cap stocks continued to outperform, with the Midcap index once again approaching its record high, reflecting broad-based participation and sustained investor appetite beyond large-cap stocks.

The resilience of the broader market suggests that the ongoing consolidation in benchmark indices is being driven primarily by external factors rather than any meaningful deterioration in domestic fundamentals.

Strategy Ahead

The market enters the coming week at an important juncture, with macroeconomic data releases, corporate earnings, and geopolitical developments expected to drive sentiment.

While near-term volatility may persist due to developments in West Asia and fluctuations in crude oil prices, the underlying domestic fundamentals remain supportive. Investors should continue to focus on companies with strong earnings visibility, healthy balance sheets, and improving relative strength.

Among sectors, banking, realty, pharmaceuticals, and defence continue to appear well positioned, while a stock-specific approach is likely to be more rewarding than broad sector allocation.

Given the potential for sharp market swings around earnings announcements and geopolitical developments, investors should maintain disciplined position sizing, avoid excessive leverage, and adhere to prudent risk management practices.

Ajit Mishra – SVP, Research, Religare Broking Ltd.