Market Summary

Markets ended the week with modest gains despite heightened volatility, as investors navigated the rollout of the new Closing Auction Session (CAS) framework for F&O stocks, the Reserve Bank of India’s monetary policy decision, and lingering geopolitical uncertainties.

For the week, the Sensex gained 0.52% to close at 78,499.17, while the Nifty advanced 0.77% to settle at 24,570.65. Broader markets outperformed the benchmark indices, with the midcap and smallcap indices rising 0.81% and 2.61%, respectively, reflecting sustained stock-specific buying beyond large-cap names.

Key Market Drivers

The rollout of the NSE’s Closing Auction Session (CAS) for F&O stocks was the week’s key market development. Effective 3 August 2026, continuous trading in F&O stocks ends at 3:15 pm, followed by the closing auction session, while derivatives trading continue until 3:40 pm. Although the new framework aims to improve price discovery and reduce end-of-day volatility, its initial implementation triggered sharp price swings during the closing minutes of trade, particularly in the first three sessions.

On the policy front, the RBI’s Monetary Policy Committee unanimously kept the repo rate unchanged at 5.25% and retained its neutral stance. The central bank raised its FY27 GDP growth forecast to 6.7% and lowered its inflation projection to 5.0%, while reiterating that volatile crude oil prices, uneven monsoon conditions, geopolitical uncertainties, and global trade developments remain key risks.

Domestic macroeconomic indicators remained mixed. The HSBC India Services PMI eased to 53.3 in July from 57.4 in June, while the Composite PMI moderated to 54.3 from 57.1, indicating slower but continued expansion in private-sector activity.

Globally, sentiment improved as Brent crude eased towards US$82 per barrel amid hopes of progress in diplomatic discussions over the Strait of Hormuz. However, geopolitical uncertainty continued to keep energy markets on edge.

Sectoral Snapshot

Sectoral performance remained mixed and largely earnings-driven. Metal, auto and information technology stocks witnessed selective buying, supported by encouraging quarterly earnings and improving sentiment towards global technology companies. Meanwhile, realty and financial stocks remained under pressure, weighing on the benchmark indices despite the resilience of the broader market.

Key Events to Watch

The coming week will be driven by a combination of domestic macroeconomic releases, corporate earnings, and global geopolitical developments.

Domestically, investors will closely monitor the July CPI inflation print, WPI inflation, and the latest foreign exchange reserves data for fresh insights into inflation trends and external sector stability. These releases will be particularly important following the RBI’s decision to maintain a neutral monetary policy stance.

The Q1 FY27 earnings season will gather further momentum, with several companies, including Ashok Leyland, Apollo Hospitals, HAL, Bharat Forge, Grasim Industries, and Tata Motors, scheduled to announce their quarterly results.

Globally, market participants will continue to monitor developments surrounding the Strait of Hormuz, movements in crude oil prices, and broader geopolitical negotiations involving Iran.

Technical Outlook

Nifty

The Nifty remained volatile during the week but continued to hold above the crucial breakout zone of 24,350-24,500, indicating that the broader trend remains constructive despite intermittent profit booking.

A sustained hold above this zone should keep the bullish structure intact. However, a decisive breach below 24,350 could trigger further profit booking towards the 24,100 support zone.

On the upside, the 24,800-25,000 zone remains the immediate resistance. A sustained breakout above this range could extend the ongoing rally towards the 25,200 level.

Bank Nifty

Bank Nifty witnessed consolidation during the week amid selling in heavyweight financial stocks but continues to trade within a constructive medium-term structure.

Immediate support is placed in the 56,500-57,100 zone, while major resistance is seen around 58,700. A sustained move above this hurdle could revive momentum and pave the way for an advance towards the 59,600 region.

Market Breadth

Market breadth remained encouraging despite the volatility in the benchmark indices. Both the MidCap and SmallCap indices outperformed, reflecting sustained investor interest in broader market opportunities and continued stock-specific participation.

The divergence between the benchmark indices and the broader market suggests that the recent weakness remained largely confined to select heavyweight stocks, while earnings-driven opportunities continued to emerge across the broader market.

Strategy Ahead

The market enters the coming week with a balanced outlook, supported by resilient domestic fundamentals, a stable monetary policy, and an encouraging start to the earnings season. However, investors are likely to remain cautious amid evolving geopolitical developments in West Asia and fluctuations in crude oil prices.

Stock selection is expected to remain the dominant theme as the earnings season progresses. Investors should continue to focus on companies with strong earnings visibility, healthy balance sheets, and improving relative strength. Maintaining disciplined position sizing and prudent risk management will remain essential, given the potential for heightened volatility arising from geopolitical developments, macroeconomic data releases, and earnings-related reactions.

Ajit Mishra – SVP, Research, Religare Broking Ltd.