Markets extended their rebound for a second consecutive session on Thursday, driven by broad-based buying in pharma, metals and financial stocks, even as the rupee hit a fresh all-time low of 95.96 against the dollar and crude oil remained elevated at around $105 per barrel.
Rohit Sarin, Co-Founder of Client Associates, captured the underlying tension: “Markets are constantly discounting future expectations, not just reacting to current events.”
The closed at 23,689.60, up 277 points or 1.18 per cent, while the BSE gained 789.74 points or 1.06 per cent to settle at 75,398.72. The Nifty Midcap 100 rose 1.1 per cent, while the Smallcap 100 ended flat. Nifty Metal and Nifty Pharma were among the top sectoral gainers, jumping 2 per cent and 2.7 per cent respectively, while the Nifty IT index was the lone laggard, falling nearly 2 per cent, weighed down by concerns over intensifying global AI competition.
The day’s rally was anchored largely by optimism around the ongoing US-China summit. Aditya Agrawal, CIO at Avisa Wealth Creators, noted that “…a constructive US-China summit could improve global risk appetite, support equities, ease supply chain concerns and strengthen emerging market inflows.” Sentiment was further aided by reports that the Indian government is considering reducing taxes on foreign bond investments to attract overseas capital and support the rupee.
Macro headwinds
Despite the equity recovery, macro headwinds remained prominent. India’s wholesale inflation surged to a 42-month high of 8.3 per cent in April, raising fears of margin pressure and a delayed rate-cut cycle by the RBI. The rupee’s slide to record lows and sustained foreign institutional outflows continued to cap the upside, even as domestic institutional investors and retail participation through SIPs provided a partial buffer.
On the commodities front, strong global copper prices supported the metals rally, while elevated crude remained a concern given India’s position as a large net oil importer — a dynamic that could widen the current account deficit and keep inflation sticky.
India also moved to ban sugar exports until September 2026 to stabilise domestic prices amid tightening supply, adding another layer to the inflation narrative.
Looking ahead, markets are expected to stay sensitive to crude oil price movements, rupee trajectory, foreign fund flows and geopolitical developments, particularly in West Asia. Fund Manager Kuunal Shah of Carnelian Asset Management drew a historical parallel: “This situation is quite similar to where the markets were in 2022… 2027 and 2028 may emerge as good years for investors currently investing in the markets.” Key data points to watch include US weekly jobless claims and UK GDP figures, while PM Modi’s ongoing five-nation visit may yield announcements on defence and energy partnerships that could further shape sentiment.