Dalal Street has clocked steady gains in trade today and staged a comeback after a sharp sell-off in the previous session . Benchmark indices bounced back on Thursday as investors turned optimistic amid easing concerns over crude oil prices and improving global cues.
At the time of writing, the Sensex was trading up 0.7%, higher above the 77,000 mark. On the other hand, the Nifty reclaimed the 24,000 level.
So, what is driving today’s recovery, and what should investors keep an eye on through the day?
Markets recover after yesterday’s sharp correction
The sharp recovery comes a day after equity markets saw a broad-based selling following escalating geopolitical tension in West Asia.
While concerns around the conflict remain, investors appear to be taking comfort from the fact that crude oil prices have not moved sharply higher.
Technical indicators signal key levels
According to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, “The frontline indices have staged a smart recovery post the sharp correction in trade yesterday on the back of escalating tension in West Asia. Broader markets continue to outperform with Nifty Midcap 100 and Nifty Small Cap 100 currently trading 1.48% and 1.7% higher respectively. The weekly expiry in Sensex has added to the additional volatility in the markets.”
On the technical front, Shah believes investors should closely track key support and resistance levels.
“Coming back to Nifty, the zone of 23910-23930 will act as a crucial support for the index while the resistance lies in the zone of 24160-24180. On the downside, if the index slips below the level of 23910 then the next support is placed in the zone of 23760-23780,” he added.
He further added, “In an event of a surge above 24180, the index can experience an extension of the rally towards 24380. On the options front, meaningful call writing witnessed across 24100 & 24200 strikes. On the put side, 24000 has a substantial open interest, followed by 23900 strike. Nifty’s Advance Decline Ratio is at 34:16. Speaking of Sensex levels, support is at 76,700 while resistance is at 77,500.”
Crude oil remains the biggest macro trigger
The movement in crude oil prices continues to remain one of the biggest factors influencing investor sentiment.
Commenting on the current situation, Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said, “There are market indications that things may not deteriorate as feared. First, Brent at $80 is not a problem. It won’t create a BoP crisis. The crisis will reemerge only if the tensions lead to the closure of the Strait of Hormuz again and consequently crude spiking above $100. The present futures do not reflect such a pessimistic scenario.”
He further added, “September crude is trading at $76, which means the market doesn’t believe that the situation will aggravate. Globally, markets haven’t panicked. But the scenario needs to be watched closely.”
All eyes on TCS earnings
Another major trigger for the market today is the June quarter earnings of Tata Consultancy Services (TCS), which will officially kick off the earnings season for the information technology sector.
The company’s Board of Directors is scheduled to meet later today to approve its April-June quarter results. The board will also consider the declaration of an interim dividend.
Apart from the quarterly numbers, investors will closely track the management’s commentary on demand trends, artificial intelligence spending, deal wins and the outlook for the rest of the financial year.
Banking, pharma and telecom stocks lead the rally
Buying was visible across several sectors during the session.
Among the top gainers were Grasim Industries, SBI Life Insurance, Bharti Airtel, Sun Pharmaceutical Industries, Shriram Finance, Max Healthcare Institute and Tata Consumer Products, each rising around 2% or more in intraday trade.
IT remains the only weak spot
Information technology stocks continued to lag.
The Nifty IT index remained under pressure as investors stayed on the sidelines ahead of TCS’ quarterly earnings. Apart from company-specific expectations, concerns around the United States interest rate outlook and cautious technology spending by global clients also weighed on sentiment.
What to expect from the Q1FY27 earnings season
Apart from company-specific developments, investors will also be tracking the broader June quarter earnings season, which officially begins with TCS.
Kotak Institutional Equities – Strategy Note by Sanjeev Prasad, MD & Co-Head said, “We expect 1QFY27 net profits of the BSE-30 index to increase 4.8% yoy and of the Nifty-50 index to increase 9.8% yoy. We estimate the ‘EPS’ of the Nifty-50 Index at Rs1,244 for FY2027 and Rs1,426 for FY2028.”
The brokerage expects earnings growth to be supported by capital goods, diversified financials, metals and mining, and telecom companies. However, it believes overall profitability could remain under pressure because of weak earnings from oil marketing companies.
Prasad noted, “On an overall basis, we expect net income of the KIE universe to decline 8.7% yoy in 1QFY27 due to a sharp decline in the profits of OMCs from marketing and inventory losses amid crude price volatility.”
It also expects sectors such as construction materials, pharmaceuticals and transportation to report year-on-year pressure on profits during the quarter.
