It’s been a case of bulls reasserting themselves as milder crude and robust local flows put India back in the spotlight. The Nifty was quick to put 24,000 in the rearview and the Sensex put up over 550 points at one point, all while the rest of the world was preoccupied with tech wobbles and tensions abroad.
When oil is down, you don’t hear as much about being on the defensive and more about what the earnings can do. With Brent in multi-month lows, the math works out better for a consumer-driven India, so the indices have been able to let the global noise go and revalue their cyclical side of the house.
Oil’s slide resets India’s risk calculus
Energy has been the big macro story of late. We’re seeing Brent around $71 and WTI under $68, notching in some of the lowest numbers in months. In fact, June had the steepest drop in oil since March 2020, and that’s a welcome change for India.
Not like the day before, when U.S.-Iran friction sent Brent to 73.45 and WTI to 70.13. It shows how quickly sentiment can be riled by Middle East news, but on balance, things have been in India’s favour this week.
You get less expensive fuel and logistics, better margins for the companies in the consumption space, and a lid on imported inflation. All of that makes it easier for an investor to move into domestic cyclicals and rate-sensitive names, no matter what’s happening outside our borders.
Morning cues vs midday conviction
The open was a bit of a mixed bag, but buyers didn’t take long to take charge. The Nifty was back over 24,000 in no time and held its ground. Come 12:00 PM, the Nifty 50 was at 24,026.35 (up 160.60 or 0.67 per cent) and the Sensex had put on 559.95 points for a 0.73 per cent gain to 77,038.62.
Things were a little more tentative in the pre-open. At 9:03 AM, the Sensex was 61.55 points in the red at 76,861.09 and the Nifty was barely up 5.40 to 24,011.25. Then again, the GIFT Nifty was 140 points or 0.58 per cent in the green, so there was some good feeling in the air.
One way or another, we’ve seen the market go from iffy to in motion. The BSE opened over 77,100 for a 200-plus point move and the Nifty50 was near 24,100 by 9:15. The day before it was a similar story: the Nifty started at 23,928.55 and the Sensex at 76,677.78, both up 0.26 per cent.
Breadth and leadership
There was enough depth to the rally to make it stick. If you look at the Nifty 50, Mahindra & Mahindra, Titan and Eternal were among the best of the lot, a nod to where the demand is for premium brands.
On Tuesday it was FMCG, Auto and Media on top; in the following session, Consumer Durables and Media were the ones to watch. Some buying came in for Realty as well, in line with the rate play. Metals, on the other hand, have been left behind, no doubt due to the dollar and some jitters about global growth.
And it’s not just the large caps. The Nifty MidCap and SmallCap were up 0.42 and 0.50 per cent respectively at one point. In another trade, you saw midcaps up 0.38 and smalls 0.78. There’s a steady willingness to put money to work across the board.
Positioning: domestic bids, tricky resistance
Look under the hood and the numbers tell you we are still working through some levels. The Nifty 50 has had a couple of down days, but it’s holding above the 20- and 50-day EMAs, so the trend is fine for now.
Options are telling their own tale of a tussle. The Put-Call Ratio is 0.88, with a lot of put OI at 23,400 and call OI at 24,000. That 23,400-24,000 band is where the action is, with some pushback as you get to the top end.
On a technical note, 23,800 is your support and 24,200-24,500 is where you’ll find resistance. If 23,800 gives way, we could see 23,700 or 23,650. But if we hold, and with oil being cooperative and local money in the room, we can expect to consolidate on the upside.
In the end, it comes down to the flows.
Foreign institutional investors were in the red on June 30, as net sellers to the tune of Rs 2,556.75 crore. Domestic institutions, on the other hand, put in a bid for Rs 6,842.34 crore, which is what’s been holding the line as offshore capital makes its moves in response to the macro picture.
If you’re a trader looking at near-term risk, here are the numbers to have in mind:
– 23,800 is where you’ll find support
– 24,200-24,500 is the resistance band
– Put-Call Ratio: 0.88
– OI is heavy on puts at 23,400 and calls at 24,000
– The trend is intact above the 20 and 50-day EMAs
Global headwinds and the July outlook
It has been a bit of a noisy week for external signals. A sell-off in semiconductors took down markets in Asia; South Korea’s Kospi was off more than 5 per cent at the open, enough to put a temporary halt on programme trading. U.S. stocks followed suit, with chip names leading the way down.
Then you had another day where Wall Street put in a better showing: the Dow was up 0.26 per cent to 52,319.20, the S&P 500 0.79 per cent to 7,499.36 and the Nasdaq 1.52 per cent to 26,213.72. It’s a case of strong U.S. data pitted against some profit-booking in tech.
Geopolitics is throwing in its two cents as well. You’d think the U.S.-Iran MoU from June 17 would have put an end to hostilities, but the weekend brought fresh tension and some question marks over how far they’ve come. Word on the street is that talks in Doha between the two sides have been limited.
The dollar is another thorn in the side of risk. The yen has given up ground to 162.28, a 40-year low, and there is talk of intervention. The rupee has also given back some ground, ending at 95.24 as the Dollar Index stays put.
In commodities, you can see the indecision. Gold has been holding the fort above USD 4,000 an ounce (spot at 4,013.75), and silver made 1.2 per cent to 58.98 in one sitting. But then gold gave up some on COMEX and silver was flat, even if local prices were a little firmer.
With a new month in the books, seasonality is coming up in conversation. The Nifty 50 has put up an average 2.22 per cent in Julys since 2009, and it’s been in the green 70.6 per cent of the time. We had a five-year run from 2020 to 2024 before last year’s 2.93 per cent pullback.
Put in context, the Nifty 50 is down 8.5 per cent in H1CY26 – the worst first half we’ve seen since 2020. And yet, 27 small-caps have more than doubled, so the market is clearly split.
You see this in the large caps too. Infosys, ITC and HDFC Bank have been left behind, but BHEL and Hitachi Energy India are in solid multi-year trends. It seems like money is going where the earnings are clear, while a few laggards drag on the index.
On the rally and what it means
What we’ve seen isn’t just a knee-jerk bounce. There has been a reordering of who’s in charge, with auto, FMCG and realty doing well on the back of lower input costs and home demand. They have been the ballast when metals have wavered.
Then you have names like Mahindra & Mahindra and Titan. As proxies for the kind of premium consumption that has pricing power, they make the point that in these times, you need to be able to protect your margins as much as grow them.
Breadth has been on the right side of things. The MidCap and SmallCap indices have been outpacing the front-runners now and again, which tells you risk appetite is not waning. That is important if we are to get past 24,200-24,500.
The closing figures bear this out. The Sensex was up 443.97 points (0.58 per cent) to 76,922.64 and the Nifty 50 added 140 to 24,005.85. Buyers are making their presence felt.
So the issue is whether it can hold. With crude where it is and domestic players mopping up supply, there is room to go. But if the U.S.-Iran file heats up or the dollar runs hot, 23,800 will be put to the test in a hurry.
For now, see if the Nifty can spend some time above 24,000 and make a play on the 24,200-24,500 area. Options at 24,000 are in the way, but with the season on our side and costs easing, there is a case for taking on some risk, particularly in the consumption space.
