MUMBAI — After starting the week with consolidation, the domestic market
exhibited resilience amid concerns over tariff wars and geopolitical
escalations, analysts said on Saturday.
Markets consolidated for the third consecutive week but
managed to end higher by nearly a per cent, buoyed by favourable domestic cues.
After remaining range-bound for most of the week,
benchmark indices surged sharply on Friday and settled near the week’s high,
with the Nifty closing at 25,003 and the Sensex at 82,118.99.
“The highlight of the week was the RBI’s policy
announcement, which took the market by surprise. The central bank implemented a
sharper-than-expected 50 bps repo rate cut and a 100 bps CRR reduction,
signalling a strong pro-growth stance. Notably, the policy stance was also
shifted from ‘accommodative’ to ‘neutral’ — a move that came sooner than
expected,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.
By front-loading its easing measures, the RBI has
underscored its commitment to reviving domestic growth amid global
uncertainties. While such a bold approach was expected to unfold gradually,
this decisive action reinforces confidence in the central bank’s intent to
support economic recovery while managing inflation risks.
This week, sectoral performance was broadly positive,
with rate-sensitive sectors witnessing strong buying interest. Realty, auto,
and banking stocks led the rally, reflecting improved outlooks for credit
growth and consumer sentiment. Financials and NBFCs also gained, as lower
interest rates are expected to enhance borrowing conditions.
Conversely, IT stocks underperformed due to persistent
global uncertainties, particularly in the U.S. and European markets. In the
broader markets, both midcap and smallcap indices outperformed the benchmarks,
reflecting a risk-on sentiment among investors, with gains ranging between 2.8
per cent and 4 per cent.
According to Vinod Nair, Head of Research, Geojit
Investments Ltd, bolstered by supportive macro indicators such as strong Q4 GDP,
GST collection and a favourable monsoon, investors focused on domestically
oriented and interest-sensitive sectors such as financials, real estate, retail
and FMCG, which saw strength, supported by strong institutional inflows.
Profit booking was visible during the week on account of
the ongoing global uncertainty. Mid and small caps generally outperformed large
caps, driven by better earnings and valuations.
“While China's rare earth restrictions pose long-term
risks and investors await the inflation print in the US, the aggressive RBI
rate cut, backed by cooling inflation and a steady GDP outlook, is likely to
support investor confidence amidst the ongoing global uncertainties,” Nair
noted.
Going forward, market participants will focus on key
macroeconomic data for further cues. High-frequency indicators such as CPI
inflation will be closely tracked to gauge demand trends and the central bank's
next steps, said experts.
