Indian equities broke an eight-week losing streak, but the modest rebound offered limited reassurance as crude oil climbed above $100 a barrel and the central bank took a hawkish stance after a 25-basis-point rate hike.
The Nifty 50 rose 1.30% in the Friday session to 22,520.45, while the Sensex gained 1.23% to 72,472.33. Their weekly gains were narrower, at about 0.43% and 0.78%, respectively, halting the prolonged decline without establishing a convincing recovery.
Tanvi Kanchan, associate director at Anand Rathi Shares & Stock Brokers, described the advance as a relief rally, with elevated oil prices, rupee weakness and high US bond yields continuing to weigh on sentiment.
Valuations had become more supportive, she said, with the Nifty trading around 19 times trailing earnings, below its long-term median. A sustained recovery, however, would require easing foreign selling, broader sector participation and an end to earnings downgrades.
Sumit Singhania, head of research at Bajaj Broking, echoed this: “A combination of falling crude, easing inflation and improving foreign flows would offer the clearest signal of a transition from the current cautious phase to a sustainable recovery.”
Growth meets tighter policy
The Reserve Bank of India’s (RBI) monetary policy committee unanimously raised the repo rate by 25 basis points to 5.50%, its first increase since February 2023. It also raised its FY27 growth forecast to 7.1% and its inflation projection to 5.2%.
Stronger growth offers support for corporate revenues, but the shift to calibrated tightening leaves businesses facing higher financing costs alongside renewed energy pressures.
Kanchan said the growth upgrade suggested demand was holding up, but companies’ ability to pass on costs would determine their profitability. Oil marketing companies, aviation, paints, chemicals and tyres were particularly exposed, while real estate, autos, consumer durables and smaller non-bank lenders faced pressure from higher borrowing costs.
Large, well-capitalized banks could hold margins in the near term, while a weaker rupee offered some support to IT exporters, she added.
“Stronger growth will cushion corporate earnings but is unlikely to fully offset higher borrowing and energy costs,” Singhania said.
September’s consumer and wholesale inflation readings, due on 12 and 14 October, respectively, will offer fresh signals on price pressures following the RBI’s rate hike.
A divided market
The benchmark rebound did not lift all sectors. BSE Telecommunication gained 3.7%, while FMCG and Bankex rose 2.4% and 1.3%, respectively, during the week.
Amongst the biggest losers, realty and metals fell a little over 4% while commodities declined 2.4% and power lost about 2.2%, and auto dropped 2.1%.
Globally, India outperformed several peers but trailed the stronger markets. Brazil’s Ibovespa gained 7.3%, Taiwan’s Taiex advanced 1.7%. Japan’s Nikkei 225 and the S&P 500 also outpaced the Nifty, rising 1.1% and 0.6%, respectively.
South Korea’s Kospi fell 5.4%, China’s CSI 300 & France’s CAC 40 declined 1% each and Germany’s Dax lost 0.7% .
Mayank Jain, market analyst at Share.Market by PhonePe, said that the rebound reinforced support near 22,200, but sentiment remained fragile. He placed the Nifty’s first resistance at 22,700–22,800, with support at 22,000–22,200.
Uneven start
Tata Consultancy Services kicked off the September-quarter earnings season with a beat on analyst estimates. However, cautious commentary on discretionary technology spending offered limited evidence of a broad demand revival.
The company reported revenue of $7.64 billion, up 2.36% from a year earlier and 0.2% sequentially. Net profit fell 0.68% sequentially to $1.45 billion. The focus now shifts to whether peers report improving client budgets and stronger deal execution.
“For a broader recovery, earnings need to show that demand is real and margins are defensible,” Kanchan said.
Next week’s earnings calendar features IT giants HCL Technologies (12 October), Wipro and Tech Mahindra (both on 15 October). Investors will focus on deal wins, growth guidance and spending by overseas banking and retail clients, according to Singhania. Non-tech heavyweights like Nestlé India and Jio Financial Services, Bajaj Housing Finance and HDFC Bank will report their results between 15 October and 17 October.
Going ahead, Singhania said that investors should watch festive-season consumer demand, companies’ cost management, bank loan growth and whether defaults in personal loans and microfinance remain contained.
