By Research desk
Market Performance Summery – June 26:
Overview:
- The Nifty 50 gained 1.35%, while the Nifty 500 rose 1.50% during June 2026.
- Broader markets outperformed, with the Nifty Smallcap 250 and Nifty Microcap 250 advancing 4.30% and 6.35%, respectively, reflecting improved risk appetite.
What Changed?
- Easing geopolitical tensions in the Middle East reduced the market’s risk premium.
- Brent crude corrected sharply from over US$77/bbl during the month to around US$69/bbl, easing concerns over inflation, corporate input costs and India’s current account.
- Improving global sentiment encouraged investors to gradually rebuild equity exposure.
Currency & Institutional Flows
- The Indian Rupee traded in a 94.6–95.6 range during June before strengthening to around 94.4 per US Dollar as crude prices softened.
- Foreign Institutional Investors (FIIs) remained net sellers during the month with Rs 49,340 Cr exit as global and domestic factors continued to weigh on investment sentiment.
- While Domestic Institutional Investors (DIIs) continued to provide support through sustained buying with Rs. 85,800 Cr, helping absorb foreign outflows and underpin market resilience.
Sector Performance:
| Sector | Return | What Drove It? |
| Realty | +11.1% | Biggest gainer as the RBI held rates at 5.25% and Brent crude fell to ~US$69/bbl, improving sentiment towards interest-rate-sensitive sectors. |
| Banking | +8.0% | Strong loan growth (17.7% YoY) and sustained DII buying supported financial stocks. |
| Financial Services | +7.8% | Improved risk appetite and expectations of resilient earnings. |
| PSU Banks | +6.6% | Attractive valuations and improving balance sheets continued to drive buying interest. |
| Pharma | +4.9% | Defensive sector outperformed amid global uncertainty. |
| Auto | +2.7% | Strong sales momentum. |
| FMCG | +2.5% | Lower crude prices improved margin outlook by easing input cost pressures. |
| IT | -17.2% | Weakest performer as a hawkish US Fed and slowing global tech spending weighed on sentiment. |
| Metals | -8.6% | Softer China demand and weaker manufacturing activity pressured metal prices. |
| Commodities | -4.3% | Stronger US Dollar and weaker global demand weighed on commodity prices. |
| Energy | -1.1% | Falling crude oil prices reduced earnings expectations for upstream energy companies. |
Key Economic Highlights:
| Indicator | Latest Data | The Bottom Line |
| Industrial Production (IIP) | 5.1% YoY | Solid industrial resilience led by manufacturing (+5.5%). Capital goods growth highlights sustained domestic investment momentum. |
| Manufacturing PMI | 54.2 | Growth is normalizing from earlier peaks as new orders cool slightly, but remains in solid expansion territory (>50). |
| Services PMI | 57.3 | Robust domestic consumption continues to drive strong services activity, despite a minor month-on-month moderation. |
| Bank Credit Growth | 17.7% YoY | Credit demand remains red-hot. However, slower deposit growth (12.0%) means banks face tightening liquidity and potential margin caps. |
| Forex Reserves | $672.6 billion | Near-record reserves provide the RBI a massive, structural buffer to defend the Rupee against global volatility. |
| Fiscal Deficit | ₹1.62 lakh cr | The May deficit narrowed significantly, keeping the government on track with FY27 targets while sustaining infrastructure capex. |
Fundamental Outlook:
- Earnings in focus: With the Q1FY27 earnings season underway in the coming month, management guidance on demand, margins and order inflows is expected to drive market performance.
- Macro tailwinds improving: Brent crude at ~US$73/bbl is helping ease inflation, reduce India’s import bill and support corporate profitability.
- Growth remains resilient: India’s FY27 GDP growth is projected at 6.7-6.9%, supported by strong domestic demand and continued government capital expenditure.
- Liquidity remains supportive: DIIs have invested US$22 billion in FY27 YTD, comfortably offsetting US$13 billion of FII outflows and providing stability to the market.
- Valuations remain reasonable: The Nifty is currently trading at around 20.8x trailing PE. While valuations remain above historical averages, improving earnings visibility and supportive domestic fundamentals continue to underpin the medium-term outlook.
Technical Outlook:
- The Nifty continues to trade above its 20-day and 50 day EMAs, indicating a healthy uptrend with buying interest emerging on every decline.
- The RSI at ~63 reflects strong bullish momentum while remaining below the overbought zone (70), leaving room for further upside.
- Key levels: Immediate support is placed at 24,000, followed by 23,500, while 24,500 is the first major resistance. A sustained breakout above 24,500 could open the path towards 25,000.
- Volatility: India VIX has eased to around 13, suggesting relatively lower market volatility, although the Q1FY27 earnings season could trigger stock-specific swings.
US Market Outlook:
- Fed remains hawkish: A higher-for-longer interest rate outlook is supporting the US Dollar while putting pressure on equity valuations.
- Earnings in focus: Strong AI led capex continues to support markets, but elevated valuations leave limited room for earnings disappointments.
- Consumer demand softening: Rising credit card delinquencies and weakening lower-income consumer spending could weigh on retail and discretionary sectors.
- Overall View: The long-term outlook remains constructive, but higher interest rates and rich valuations may keep near-term volatility elevated.
Gold Outlook:
- Gold has corrected ~9.8% over the past month as higher US real yields reduce the appeal of non-yielding assets.
- De-escalating geopolitical tensions and a ~22% decline in Brent crude have reduced safe haven buying.
- Dollar remains a headwind: A stronger US Dollar is likely to cap near-term upside in gold prices.
- Long-term support intact: Continued central bank buying should provide a floor to prices, although near-term volatility is expected to persist.
Final View:
- Outlook remains positive: India’s growth story remains intact, supported by strong domestic demand, government spending, supportive RBI measures and improving corporate earnings.
- Earnings will drive returns: As the market shifts from a valuation-led phase to an earnings-led one, companies delivering consistent growth and strong execution are likely to outperform.
- Preference for quality: We continue to favour fundamentally strong businesses in BFSI, Capital Goods, Healthcare, Power & Energy, along with select consumption and capex-related opportunities, while remaining cautious on IT.
- Stay focused on the long term: While global uncertainties may keep markets volatile in the near term, market corrections could be viewed as opportunities to gradually build exposure to high-quality businesses with strong earnings visibility.
Investors are advised to consult their financial advisors before making any investment decisions. This view does not constitute investment advice.
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