After suffering its biggest weekly loss in 25 years, the Indian stock market caught its breath as frontline indices rebounded to close the week higher, with Friday’s session accounting for the bulk of the gains.
The Nifty 50 closed Friday’s session 1.30% higher, recovering much of the previous day’s losses. The rally also marked the index’s biggest single-day gain since August, helping it post a weekly gain of 0.44%.
Similarly, the Sensex ended the week 0.78% higher. The rally was largely supported by strong gains in financial stocks as investors cheered the companies’ strong quarterly business updates.
In addition, IT stocks lent much-needed support to the market, as TCS’ September-quarter results boosted sentiment across the sector. Investors largely brushed aside the US government’s decision to suspend some IT firms from the Permanent Labor Certification programme (PERM), instead focusing on TCS’ quarterly performance.
The move is part of a broader effort by Washington to curb pathways to permanent residency for certain foreign workers.
Trump’s Iran remarks ease crude oil prices, offer relief to markets
The markets had remained under pressure amid rising crude oil prices, with Brent crude trading above $100 per barrel as tensions in West Asia persisted amid the threat of potential attacks on Iran. India is a major importer of crude oil, making higher prices a key risk for inflation and growth.
However, in a major development, US President Donald Trump said the US would not attack Iran before the midterm elections while also citing productive discussions with Tehran.
Commodity traders took note of the latest remarks, pushing Brent crude below $103 a barrel. However, risks remain elevated, as Trump has made similar announcements in the past, only to reverse course later.
In addition, the drop in crude oil prices eased some of the upward pressure on global bond yields.
Meanwhile, analysts expect lower crude prices could revive foreign investor interest, potentially slowing the recent selling spree. Foreign investors have already offloaded Indian equities worth ₹44,166 crore in October in just five trading sessions, surpassing the ₹35,861 crore in outflows recorded in September, as per the NSDL data.
Is the latest market rally a sign of recovery or just a relief bounce?
Vinod Nair, Head of Research at Geojit Investments Limited, said domestic equities staged a relief rally, supported by value buying and short covering after the recent sharp correction. IT stocks outperformed on the back of a strong start to the Q2 earnings season and rising confidence in AI-driven revenue opportunities.
Nair said sentiment was aided by easing geopolitical concerns following indications that any potential US military action against Iran was unlikely before the midterm elections, helping crude prices moderate. However, persistent FII outflows and elevated global bond yields continue to temper the recovery outlook.
Nair added that investors now await domestic CPI data on Monday for further cues on the interest-rate trajectory after the RBI’s shift to calibrated tightening. Going forward, the actual performance of Q2, which is estimated to be good on a year-on-year basis, will be critical in determining the sustainability of the market rebound.
Ponmudi R, CEO of Enrich Money, said that despite Friday’s strong advance, the broader outlook remains cautious. He said the rebound appears more consistent with a relief rally from oversold levels than a confirmed reversal in the market’s trend.
He said persistent foreign fund outflows, elevated energy prices, rupee weakness and expectations of tighter monetary conditions remain key headwinds. He added that a sustained recovery will require follow-through buying and clearer signs that these pressures are beginning to ease.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
