Indian stock markets traded higher on Wednesday with Sensex gaining around 540 points to 77,592 and Nifty 50 rising 150 points to 24,202 as of 9:35 am. The rally followed an unexpected slowdown in US inflation that scaled back expectations for the Fed's interest rate hikes, boosting global markets. According to The Economic Times, the India VIX volatility measure dropped over 3% to 13.31, indicating easing market volatility. The renewed optimism was broad-based, with Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 0.6%, while the overall market breadth remained positive with NSE seeing 1,847 advances and 565 declines. Despite Wednesday's gains, the Sensex and Nifty ended the week with marginal losses of 0.25% and 0.26% respectively, snapping their four-week winning streak.
Banking and financial stocks led the market rally on Wednesday, with Nifty Bank and Nifty Financial Services indices advancing 1.19% and 1.37% respectively. As of 12 PM, the Nifty Bank index was trading higher by 471 points or 0.82% at 57,933, led by heavyweights IndusInd Bank and IDFC First Bank. According to Business Standard, Union Bank shares were trading 3.70% higher at ₹176 apiece, while IndusInd Bank gained 1.81% to quote at ₹1,015, and IDFC First Bank gained 1.07% to quote at ₹80 on the National Stock Exchange. Other private sector constituents including State Bank of India, Union Bank, Canara Bank and HDFC Bank also gained, with SBI trading at ₹1,026 (1.11%), Union Bank at ₹172 (1%), Canara Bank at ₹326.5 (2.1%), HDFC Bank at ₹127 (1.04%), and HDFC Bank at ₹817 (1.02%). The strong performance was driven by upcoming Q1FY27 results from major private lenders including HDFC Bank, Axis Bank and ICICI Bank, due over the weekend on July 18.
The Nifty Financial Services index gained 1.19%, with Shriram Finance leading the gains, up 2.89% at ₹1,043. According to Business Standard, Cholamandalam Investment and Finance Company and Bajaj Finance surged more than 2% each to trade at ₹1,814 and ₹1,028 respectively. Among the top gainers on the Sensex, Asian Paints, Bajaj Finance, Axis Bank, Bharti Airtel, IndiGo and Reliance Industries shares gained around 1% each to lead the gains. However, IT stocks including TCS, Tech Mahindra, HCL Tech and Infosys dropped up to 2% to lead losses on the benchmark index. According to The Economic Times, sectorally, Nifty Financial Services, Nifty Private Bank, Nifty PSU Bank and Nifty Auto gained nearly 1% each, while Nifty IT dropped over 1%.
The rally was primarily driven by an unexpected slowdown in US inflation, with the US headline consumer price index falling 0.4% in June, its first decline since the COVID-19 pandemic, while annualised core inflation of 2.6%, as against expectations for 2.8%. According to The Economic Times, South Korea's Kospi surged 7%, while Japan's Nikkei rose more than 1%, boosting global market sentiment. However, some caution remains as VK Vijayakumar from Geojit Investments noted that with uncertainties in West Asia continuing and Brent crude trading around $86, there are no positives that can lift the market higher in the near-term. The analyst also highlighted concerns about US President Trump's comments regarding charges on countries for US assistance to ships transiting through the Strait of Hormuz, describing this as rendering investment decisions extremely challenging. However, G Chokkalingam from Equinomics Research noted that crude oil prices stabilising at $85 per barrel after US President Donald Trump announced plans to drop 20% transit fee on oil vessels passing through Strait of Hormuz is acting as a tailwind for the sector.
From a technical perspective, Rajesh Palviya from Axis Direct noted that the 24,200 level continues to be the immediate hurdle for the Nifty 50 index, who added that a sustained move above this could pave the way towards 24,350–24,500. On the downside, 24,000, which coincides with the 20-day moving average, is a crucial support, and a decisive breach may accelerate weakness towards 23,900-23,800. Looking ahead, VK Vijayakumal from Geojit Investments highlighted that developments around crude oil prices and the Strait of Hormuz situation will remain the key drivers of near-term market direction. According to Business Standard, Sudeep Shah from SBI Securities noted that Nifty Bank has been consolidating within the 58,706–56,549 range for nearly a month, with the index continuing to trade above key short- and long-term moving averages. The analyst expects both the Nifty 50 and Sensex to gain around 5% over the next quarter, with the banking, automobile, and telecom sectors likely to lead the rally.
