The Indian equity benchmarks saw significant gains for the second consecutive week, driven by investor optimism surrounding the improved geopolitical situation following the US-Iran peace agreement and a decrease in Brent crude prices. Nifty rose by 1.65% over the week but fell by 0.64% on the final trading day to close at 24,013, while Sensex dropped by 607 points or 0.78% to 76,802, despite a 1.69% increase during the week.
Domestic markets experienced consolidation on the last trading day, primarily impacted by a sharp decline in IT stocks after three days of benchmark gains. Brent crude, which had fallen below $80 per barrel on hopes of a US-Iran peace deal, saw a pause in its price decline due to the sudden cancellation of peace talks and profit booking towards the end of the week.
The rupee strengthened by approximately 79 paise to about 94.35 per dollar during the week. Analysts anticipate that the improved geopolitical environment will bolster market sentiment in the upcoming week. A 14-point US-Iran MoU signed during the week included agreements on the Strait of Hormuz, naval blockade removal, and commercial shipping restoration.
In terms of sectors, consumer durables, real estate, pharma, and defense witnessed notable gains. The defense sector surged by 6.6% over the week, supported by strong fundamentals. Conversely, IT emerged as the weakest performer, with the Nifty IT index plummeting by 6.5% following Accenture’s downward revision of its FY26 revenue growth guidance.
The US Fed maintained a cautious stance on monetary policy, emphasizing data dependency and limited forward guidance, reinforcing a prolonged higher rate outlook. The RBI also adopted a cautious approach. Analysts suggest that declining crude prices and progress in trade deals with the UK and US could gradually improve the outlook, with clearer policy direction expected in subsequent reviews.
Broad market indices outperformed benchmark indices, with Nifty Midcap100 rising by 2.62% and Nifty Smallcap100 surging by 3.23% during the week. Investors are closely monitoring India’s monsoon progress, with June rainfall currently 38% below normal due to El Nino conditions. Any delay in monsoon advancement could raise concerns regarding kharif sowing, food inflation, and rural demand.
Key data to watch for market direction in the near term include India PMI, credit growth figures, US PCE, and GDP prints.
