By Our Business Correspondent
Domestic equity markets staged a strong recovery on Wednesday, with benchmark indices posting significant gains amid improving investor sentiment driven by easing concerns over interest rate hikes, renewed foreign fund inflows, falling crude oil prices and optimism surrounding a potential India-US trade agreement.
The rally was led by heavyweight banking and information technology stocks, helping the benchmarks reverse recent losses. Market participants also drew comfort from comments by Reserve Bank of India (RBI) Governor Sanjay Malhotra, who indicated that discussions on interest rate increases were premature, easing concerns over a tighter monetary policy environment.
The BSE Sensex advanced 790.54 points, or 1.04 per cent, to close at 76,991.22, while the Nifty 50 climbed 197.55 points, or 0.83 per cent, to settle above the psychologically significant 24,000 level at 24,021.65.
Banking, IT Stocks Drive Rally
Private sector banking majors and IT bellwethers emerged as the key contributors to the market’s gains. ICICI Bank rose 2.59 per cent, while HDFC Bank gained 2.34 per cent. In the technology space, Infosys surged 2.59 per cent after announcing an expanded multi-year strategic partnership with semiconductor manufacturer GlobalFoundries aimed at accelerating AI-led transformation initiatives.
The rally in large-cap stocks significantly outpaced broader market performance, highlighting investor preference for quality and defensive names amid ongoing global uncertainties.
Broader Markets Lag Benchmark Performance
Despite the strong gains in frontline indices, the broader market delivered a relatively subdued performance. The BSE MidCap Index gained 0.13 per cent, while the BSE SmallCap Index rose 0.20 per cent, reflecting selective participation beyond large-cap counters.
Market breadth remained positive, although only marginally. On the National Stock Exchange (NSE), 1,735 stocks advanced compared with 1,566 declining shares, while 95 stocks remained unchanged.
A notable indicator of improving risk appetite was the sharp decline in market volatility. The India VIX, widely regarded as the market’s fear gauge, fell nearly 4 per cent to 13.39, indicating reduced expectations of near-term volatility among investors.
Multiple Tailwinds Support Market Sentiment
Apart from domestic policy reassurance, investors responded positively to a combination of favourable global and macroeconomic developments.
Crude oil prices continued their downward trajectory, with Brent crude slipping below the $77-per-barrel mark. Lower energy prices are viewed as beneficial for India, which imports the majority of its crude oil requirements, helping ease inflationary pressures and improve the country’s trade balance.
Investor confidence was also supported by expectations of progress in negotiations toward an India-US trade agreement, which market participants believe could strengthen export prospects and attract additional foreign investments.
Additionally, foreign institutional investors (FIIs) remained net buyers, lending further support to domestic equities.
Regional sentiment improved after South Korean markets recovered following MSCI’s decision to retain South Korea’s emerging market classification in its latest market accessibility review.
Bond Market, Currency and Commodities
In fixed-income markets, the yield on India’s benchmark 10-year government bond eased to 6.805 per cent from 6.840 per cent in the previous session, indicating improved demand for sovereign debt.
The Indian rupee strengthened modestly against the US dollar, with the partially convertible currency trading at 94.6625 compared with the previous close of 94.7600.
Gold prices witnessed profit-booking, with MCX Gold futures for August delivery declining 1.44 per cent to ₹1,44,416 per 10 grams.
Globally, the US Dollar Index edged higher to 101.65, while yields on US 10-year Treasury securities softened to 4.481 per cent.
Global Markets Remain Cautious
While Indian markets ended firmly in positive territory, global equities continued to face headwinds from a technology-led selloff and concerns over the US Federal Reserve’s policy outlook.
Most European markets traded with modest gains, although investor enthusiasm remained restrained amid weakness in global technology stocks.
Asian markets ended on a mixed note following a broad correction in semiconductor and technology shares. Market participants remain wary of elevated volatility as investors reassess growth expectations and interest rate trajectories globally.
Meanwhile, developments in the Middle East remained under close scrutiny. The International Maritime Organization indicated that more than 11,000 seafarers stranded in the Persian Gulf were expected to begin exiting through the Strait of Hormuz, a critical route that handles nearly one-fifth of global oil shipments.
Overnight, Wall Street witnessed a sharp decline led by technology stocks. The S&P 500 fell 1.44 per cent, while the Nasdaq Composite dropped 2.21 per cent amid continued pressure on semiconductor and memory-chip companies. The Dow Jones Industrial Average ended marginally lower.
Stocks in Focus
Trent Ltd. rallied 3.6 per cent after management unveiled an ambitious expansion roadmap at its 47th Annual General Meeting. The retailer plans to add approximately 50 Westside stores annually, continue opening 200–250 Zudio outlets each year and expand its Star supermarket network by 25–40 stores annually. Investors also took note of chairman Noel Tata’s announcement that he would step down after nearly three decades associated with the group’s retail business.
Tata Motors gained 3.21 per cent after presenting an optimistic long-term growth strategy during its Investor Day. The company said it had already achieved several FY27 targets ahead of schedule and outlined ambitions to become the world’s fourth-largest commercial vehicle manufacturer following its proposed acquisition of Iveco.
Indian Railway Finance Corporation (IRFC) declined 6.83 per cent after the Government of India launched an offer for sale (OFS) to divest up to a 2 per cent stake. The OFS floor price of ₹91 represented a significant discount to the stock’s previous closing price. Despite the decline, institutional demand remained robust, with the non-retail portion receiving subscriptions well above the shares on offer.
Tanfac Industries rose over 3 per cent after its board approved a Qualified Institutional Placement (QIP) issue with a floor price of ₹2,090.43 per share.
Prostarm Info Systems fell 1.84 per cent despite securing a ₹4.03-crore order from Karnataka State Fire and Emergency Services after being declared the lowest bidder.
Bharat Dynamics slipped marginally after announcing fresh orders worth approximately ₹1,347.71 crore from Hindustan Aeronautics Ltd (HAL).
Power & Instrumentation (Gujarat) also ended lower despite securing a ₹3.72-crore contract from Ajmer Vidyut Vitran Nigam under Rajasthan’s Revamped Distribution Sector Scheme.
IPO Market Update
Activity in the primary market remained mixed.
Advit Jewels continued to attract strong investor interest, receiving bids worth more than 42 times the shares on offer, reflecting robust demand from investors.
In contrast, Waterways Leisure Tourism saw a muted response, with subscriptions reaching only 0.50 times the issue size.
New entrant CSM Technologies, which opened for subscription on Wednesday, witnessed a relatively slow start, with bids amounting to just 25 per cent of the shares on offer by late afternoon.
Outlook
Market experts believe domestic equities could remain supported in the near term by easing crude oil prices, improving foreign fund flows and expectations of a stable interest-rate environment. However, investors are likely to remain cautious amid global technology sector weakness, geopolitical developments in the Middle East and uncertainty over the future course of US monetary policy.
The ability of the Nifty to sustain levels above 24,000 will be closely watched, as investors assess whether the current rebound marks the beginning of a broader recovery or merely a relief rally following recent volatility.