Indian benchmark indices closed higher on Wednesday, tracking a broader rally across Asian markets after softer-than-expected US inflation data improved global risk sentiment. According to The Economic Times, BSE Sensex gained 130.5 points (0.2%) to settle at 77,185.43, while NSE Nifty rose 26.5 points (0.1%) to close at 24,078.50. Both benchmarks had climbed as much as 0.7% during the session before paring gains. The recovery came after the previous session's losses when Sensex had dropped 561.46 points to close at 77,054.94 and Nifty fell 158.95 points to settle at 24,052.05. The gains occurred despite crude oil prices hovering around $85 a barrel following a third round of US strikes on Iran, with Brent crude futures up 0.3% after the US resumed its blockade of Iranian ports.
Banking stocks led the market recovery with strong sectoral performance despite mixed global cues. According to The Economic Times, Nifty Private Bank index rose 1.15%, Nifty PSU Bank gained 1.07%, and Nifty Bank advanced 1.02%. The broader market also remained firm, with Nifty Midcap 150 advancing 0.4% and Nifty Smallcap 250 rising 0.7%. However, Nifty IT index traded lower, with Infosys, Persistent Systems and TCS falling up to 1% after IBM reported weaker-than-expected quarterly earnings, with IBM shares having slumped 25% overnight after the company's revenue outlook disappointed investors. This divergence in technology performance highlights the mixed sentiment across different segments of the Indian equity market.
The Indian rupee opened almost unchanged at 96.17 against the US dollar, compared with the previous close of 96.20. As reported by The Economic Times, the dollar index was down 0.11% at 100.81. According to Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP, the rupee had come under pressure on Tuesday due to surging crude oil prices, higher US Treasury yields and geopolitical tensions. The expert expects the currency to trade in the 95.90-96.50 range. Geopolitical developments remained in focus after US President Donald Trump threatened to strike Iran's power plants next week if Tehran does not return to talks, as reported by The Economic Times. Market players are not panicking on expectations that the conflict will not escalate significantly.
Foreign investor sentiment has shown improvement this month despite Wednesday's selling pressure. According to The Economic Times, Foreign Portfolio Investors (FPIs) sold shares worth ₹736 crore on Wednesday, while domestic institutional investors bought equities worth ₹705 crore. Overseas investors have remained net buyers of Indian equities to the tune of ₹10,869 crore so far in July, after pulling out ₹2,71,915 crore over the previous four months. The turnaround has been supported by stable rupee and a shift in investment preferences away from semiconductor-heavy markets, contributing significantly to the current market rally. India VIX declined 3.5% to 13.27, indicating easing market volatility, while market breadth remained mixed with 2,317 stocks advancing and 1,957 declining out of 4,442 traded on the BSE.
Asian markets rallied after softer-than-expected US inflation data strengthened expectations that the Federal Reserve may adopt a less aggressive monetary policy stance. According to The Economic Times, South Korea surged 6.2%, Taiwan rebounded 2% after the recent sell-off in semiconductor stocks, Hong Kong gained 1.4%, while China slipped 0.3%. The rebound in technology shares supported sentiment, with SK Hynix jumping 11% and an Asian semiconductor index gaining 3.5% as investors returned to chipmakers after recent volatility. This positive momentum in Asian markets provided additional support to the Indian equity rally, with Wall Street futures also pointing to a positive start, supporting domestic equities.
