Indian equities advanced on Friday, driven largely by private sector lenders and a handful of positive earnings reports, even as macroeconomic headwinds continued to weigh on sentiment. The NSE Nifty 50 index rose 0.69%, or 163.55 points, to close at 23,818.25 by 13:15 IST, according to exchange data. The BSE Sensex also climbed 0.7% to 75,710.03 during early afternoon trade.
Banking stocks were the primary catalysts for the day's gains. HDFC Bank and ICICI Bank each advanced approximately 2%, providing substantial support to the benchmark indices. The Nifty Bank and Nifty Private Bank indices outperformed the broader market, with ICICI Bank, Axis Bank, and HDFC Bank leading the charge. The substantial weight of large private banks in the indices helped lift the benchmarks even as other sectors remained largely flat.
Several companies also saw their shares rise following quarterly earnings releases. Life Insurance Corporation of India, Honasa Consumer, VA Tech Wabag, and Rashtriya Chemicals all posted gains after reporting their results. However, Central Bank of India declined after the government launched an offer for sale of up to an 8% stake at a discounted floor price through the exchange.
Despite the positive session, market participants remained cautious about several overhanging risks. Brent crude oil prices continued to hover near $105 per barrel, while the Indian rupee remained under pressure. Since India is a major oil importer, elevated crude prices can stoke inflation and further weaken the currency. Additionally, the possibility of further interest rate hikes by the Reserve Bank of India (RBI) continued to be a concern. Standard Chartered economists Anubhuti Sahay and Saurav Anand have projected that the RBI could begin hiking rates as soon as June, with a total of 50 basis points of increases split between June and August. The RBI's next monetary policy decision is scheduled for June 5.
“There is no free run in markets,” said Anuj Jain, co-founder at Green Portfolio PMS, pointing to the emergence of macroeconomic worries even as corporate earnings have remained robust. VK Vijayakumar, chief investment strategist at Geojit Investments Ltd, noted that Brent crude dipping below $105 and any gains in the rupee would be positive developments. However, foreign portfolio investors offloaded ₹1,891.21 crore in equities on Thursday, adding to the selling pressure.
Midcap and smallcap stocks did not participate in the broader rally. As of 12:30 p.m., the Nifty MidCap index was up just 0.04%, and the Nifty SmallCap index added only 0.11%. Sectoral performance was mixed, with pharma, media, and healthcare names trading lower. In the technology space, Wipro was the top gainer on the Nifty at midday, but other IT majors such as TCS, Infosys, HCL Tech, and Tech Mahindra declined, keeping the Nifty IT index under pressure.
The sustainability of the bank-led rally remains contingent on external factors. Any further uptick in Brent crude prices or a stall in U.S.-Iran nuclear talks could undermine the positive momentum. Higher fuel costs would feed through to inflation and put additional pressure on the rupee, making it more difficult for domestic buyers to offset foreign outflows. For now, traders are focusing on banking stocks and earnings-driven plays as the clearer trades, but they remain wary of the broader risks.
