By Research desk
Market Performance Recap:
Indian equities staged a strong recovery in April 2026 after the sharp correction in March, supported by easing tensions in West Asia and a moderation in crude prices from recent highs. The Nifty gained 7.5% during the month, while the Sensex rose 6.9%, reflecting a meaningful bounce in sentiment. The recovery was even sharper in the broader market, indicating that risk appetite returned quickly once external pressures began to ease.
Flows remained the key pillar throughout the month. FIIs continued to be net sellers, with total outflows estimated at ~₹60,800 crore for April. In contrast, DIIs provided strong support, with early-month data itself showing inflows of ~₹34,600 crore, helping absorb foreign selling and stabilise the market. This consistent domestic participation played a critical role in driving the recovery despite weak global cues at various points.
On the macro front, domestic indicators remained stable. India’s CPI inflation for March came in at 3.40% compared to 3.21% in February, indicating that inflationary pressures remain largely under control. The RBI, in its April policy, maintained the repo rate at 5.25% and retained a neutral stance, reinforcing confidence in domestic growth stability.
However, crude oil continued to be the most important external trigger. Brent crude corrected from ~$113 to ~$92 during April following some easing in geopolitical tensions, but India’s effective crude import price remained elevated at ~$125.9 per barrel. This kept pressure on the rupee, which averaged around 93.4 against the US dollar during the month, and continued to influence inflation expectations and overall sentiment.
Overall, April was a recovery-led month rather than a full normalisation. While markets recouped a significant portion of March’s losses, the dependence on global triggers such as crude prices, currency movement and FII flows remained clearly visible.
Moving into May, the market has seen a volatile start with a similar pattern of global dependency. The Nifty slipped to ~24,032 in the early part of the month due to profit booking, elevated crude prices and global uncertainty. Brent crude had moved back towards ~$113 amid renewed tensions in the Strait of Hormuz, which weighed on sentiment and pushed the rupee to a fresh low of ~95.4 against the US dollar.
However, sentiment improved sharply after a correction in crude prices, with Brent falling by ~6% towards ~$103 on expectations of easing geopolitical tensions. This triggered a relief rally in the market, supported by strong domestic flows and some stabilisation in global cues.
FII behaviour continues to remain cautious in May as well, while DIIs have stayed relatively consistent in providing support, helping the market avoid a sharper correction. This flow dynamic remains a key monitorable in the near term.
As of now, the Nifty is hovering around the 23,800 mark, indicating a phase of consolidation after the recent recovery and volatility. Going ahead, market direction will largely depend on crude oil movement, developments in West Asia, trends in FII flows, currency stability and Q4 results.
Sectoral performance
Sectoral trends in April 2026 saw a clear shift from the broad-based weakness of March, with almost all major sectors closing in the green as sentiment improved. The recovery was led by high-beta and beaten-down pockets, with Realty emerging as the top performer, delivering a sharp ~21.9% rebound during the month. Media (~15.4%) and Metals (~15.2%) also saw strong gains, reflecting a clear return of risk appetite, especially in cyclical and commodity-linked segments.
Consumption-oriented and rate-sensitive sectors also participated meaningfully in the upmove. Consumer Durables rose ~14.7%, FMCG gained ~12.2%, and Oil & Gas advanced ~8.4%, indicating a broad-based improvement in market breadth compared to the previous month’s sell-off. The rally was not limited to a few pockets, but rather spread across segments, signalling stronger underlying participation.
Financials saw a steady but relatively measured recovery. Nifty Bank gained ~9.1%, Financial Services ~9.0%, Private Banks ~8.9%, and PSU Banks ~7.7%. While flows did return to the sector, the recovery was more gradual, suggesting selective positioning rather than aggressive buying. Auto also performed well, with the index rising ~9.0%, supported by continued confidence in domestic demand trends.
Among cyclicals, Metals stood out as a key beneficiary of the risk-on shift, with gains in the ~15–18% range across different datasets, making it one of the strongest-performing segments for the month. Realty, in some readings, saw even sharper gains of over ~23%, highlighting the intensity of the rebound in oversold pockets once selling pressure eased.
On the other hand, IT clearly lagged the broader market. The Nifty IT index rose just ~0.6–1.0% during the month, significantly underperforming other sectors. Defensive segments also saw relatively muted participation, with Healthcare up ~5.0% and Pharma ~4.6%. This divergence indicates that April’s rally was largely driven by a shift towards cyclicals and higher-beta plays, while defensives took a backseat.
In the following sections, we provide a more comprehensive examination, outlook and detailed insights of some major sectors:
Auto:
India’s auto sector kicked off FY27 on a very strong note in April 2026, with volumes scaling fresh highs across categories despite global uncertainties. Total automobile retail sales rose 12.94% YoY to ~26.11 lakh units, making it the best-ever April for the industry. The momentum was largely driven by strong rural demand, healthy farm incomes and seasonal factors like marriage-led purchases.
Passenger vehicles remained a key contributor to this growth. Retail sales stood at ~4.07 lakh units, up 12.2% YoY, while wholesales (dispatches) were significantly stronger at ~4.4–4.5 lakh units, reflecting a ~25% YoY increase. This gap between dispatches and retail indicates continued confidence from manufacturers on demand visibility. Within this, Maruti Suzuki led the growth, reporting a sharp ~35% YoY jump in dispatches to ~1.87 lakh units, supported by both strong urban demand (~59% share) and a faster pickup in rural markets.
The two-wheeler and entry-level segments also saw steady traction, with volumes trending towards ~18.0 lakh units for the month. Demand here was supported by improved affordability following GST related adjustments and a gradual recovery in incomes at the lower end of the consumption pyramid. This suggests that demand recovery is becoming more broad-based rather than being concentrated only in premium segments.
Commercial vehicles continued to reflect underlying economic activity, with retail sales growing 15.0% YoY to ~99,339 units, indicating steady traction in logistics, infrastructure and industrial movement. At the same time, the rural economy remained a key pillar, with tractor sales crossing ~1.04 lakh units, up a strong 26.8% YoY, signalling robust agricultural sentiment and cash flows at the start of the fiscal year.
Overall, April data points indicate that the auto sector is entering FY27 with strong underlying momentum. The combination of rural recovery, stable urban demand, and continued confidence from manufacturers is supporting volumes across categories. While external risks like crude prices and global uncertainty remain, current trends suggest that domestic demand strength continues to provide a solid cushion for the sector in the near term.
Chemical:
The specialty chemicals sector is currently going through a relatively challenging phase, with operating conditions turning more uncertain towards the end of FY26 and into the early part of FY27. In Q4FY26, sector revenues are estimated to decline by ~4% YoY, although a modest ~3% sequential improvement indicates that volumes are beginning to stabilise after a weak previous quarter. The larger concern, however, remains profitability, with EBITDA margins expected to contract by ~160 bps YoY.
The primary pressure has come from a sharp rise in input costs, largely driven by geopolitical disruptions in West Asia. Crude oil has remained elevated at around ~$100/bbl, significantly higher than Q3 levels, while natural gas prices have increased ~20% sequentially. Within key raw materials, sulfuric acid prices have surged ~122% YoY and ~26% QoQ, and other intermediates such as acetic acid, ethyl acetate, PET, TDI and ammonia have also seen upward pressure due to supply tightness. On the other hand, some inputs like caustic soda and soda ash have remained softer, down ~18% and ~14% YoY respectively, while refrigerant gas R22 has corrected sharply (~50% YoY), offering limited cost relief in select segments.
Export markets have added another layer of pressure. Companies with exposure to the MENA region faced shipment disruptions towards the end of the quarter, impacting volumes. At the same time, elevated crude prices and rerouting of trade flows have pushed up freight costs, further weighing on margins. While companies have attempted selective price increases, the ability to pass on higher costs has remained inconsistent and largely dependent on product mix and end-market demand.
That said, performance within the sector remains mixed rather than uniformly weak. Segments like refrigerant gases (R32, HFO) continue to hold up relatively well with stable demand and healthy utilisation levels. The CDMO and pharma chemistry space remains a key bright spot, supported by a strong order pipeline extending into FY27, providing better earnings visibility compared to the broader sector. Additionally, areas like nutrition and acetyl derivatives have seen some sequential improvement in pricing, while domestic demand trends have shown mild recovery from earlier lows.
Agrochemicals, however, continue to lag. The segment remains under pressure due to weak global demand, pricing corrections and ongoing inventory destocking, with limited signs of near-term recovery. Companies with higher exposure to this segment are likely to continue facing earnings pressure in the near term.
From a medium term perspective, the anti-dumping duty pipeline remains an important positive. Several cases, particularly targeting Chinese imports, are at advanced stages and could improve domestic pricing power across segments such as rubber chemicals, fluoropolymers and specialty intermediates. While not an immediate trigger, this provides structural support over time.
Overall, the near-term outlook for the chemicals sector remains cautious. The sector is currently being influenced more by input cost cycles, freight inflation and geopolitical factors rather than a structural demand slowdown. A more sustained recovery will likely depend on easing crude prices, normalisation in supply chains and freight costs, and the eventual implementation of supportive policy measures like anti-dumping duties.
Insurance:
The insurance sector has started FY27 on a strong footing, with April 2026 data indicating a clear pickup in volumes across both individual and group businesses. Industry-wide individual APE (Annualised Premium Equivalent) grew ~20.9% YoY, with private players slightly outperforming at ~21.8% growth, reflecting sustained traction in core segments.
Growth has been broad-based across the industry. Along with steady individual business momentum, group APE saw a sharp surge of ~48.4% YoY, indicating strong traction in institutional and corporate-linked policies. This suggests that both retail and group segments are contributing to overall growth, improving volume visibility for the sector.
New business trends also remain healthy. Total new business premium (NBP) for the industry grew ~39.1% YoY in April, with private players reporting ~40.9% growth and LIC also delivering ~38% growth. This reflects a strong start to the year in terms of fresh policy issuance and indicates that demand momentum remains intact despite broader market volatility.
From a market share perspective, there has been some shift in favour of LIC. Private sector share in individual APE declined to ~66.9% in April (from ~71.9% in March), while LIC’s share increased to ~33.1%, indicating some month-on-month volatility in competitive positioning. However, private players continue to dominate the overall mix, holding ~56% share in total APE and ~60% share in individual NBP.
Within segments, the protection business continues to remain a key growth driver, with expectations of sustained momentum supported by improving awareness and product mix. Additionally, recovery in credit protection and non-par savings (NPAR) products is expected to further support volumes going forward.
On the profitability side, the sector outlook remains stable to improving. As the impact of earlier GST-related changes gradually normalises, VNB (Value of New Business) margins are expected to see some improvement over FY27, supported by a better product mix and operating leverage.
Overall, the insurance sector continues to demonstrate strong underlying momentum, with healthy growth across individual and group segments, robust new business traction, and improving margin outlook. While near-term market share movements may remain volatile, the structural growth story remains intact, driven by increasing penetration, product innovation and steady demand across protection and savings categories.
Banking:
The banking sector is gradually moving from a strong multi-year credit upcycle into a more balanced phase, where growth remains healthy but pressures on margins and funding are becoming more visible. Core fundamentals, however, continue to remain among the strongest seen in recent years, providing a solid base as the sector enters FY27.
System-level credit growth remained robust at ~15.9% in FY26, reflecting continued demand across retail, MSME and corporate segments. On the liability side, deposit growth lagged for most of the year and only picked up towards the end, keeping funding conditions relatively tight. As a result, the system-wide credit-deposit ratio moved up to ~81–83% by March, indicating increased pressure on deposit mobilisation and a gradual shift towards higher-cost term deposits over low-cost CASA.
Margins have started to come under pressure across the sector. With deposit costs rising and CASA ratios declining (estimated around ~37% at FY26-end), banks are seeing some compression in NIMs, making liability management a key focus area. This marks a shift from the earlier phase where margins were supported by low funding costs and strong loan growth.
That said, asset quality remains a key strength. The sector is currently at a multi-year low in terms of stress, with gross NPAs around ~2.1% and strong capital adequacy levels (~17.2%), indicating well-capitalised balance sheets. Credit costs also remain benign, which is helping support overall profitability despite margin pressures.
Recent performance trends reflect this transition. While loan growth continues to remain healthy and balance sheets are expanding, profitability is becoming more sensitive to funding costs and operating efficiency rather than just growth. The sharp correction in banking stocks in March was largely driven by global risk-off sentiment, FII selling and concerns around margins, while the recovery in April was supported by reassurance on asset quality and continued credit growth.
Looking ahead, growth is expected to moderate. Credit growth for FY27 is estimated in the ~11–14% range, compared to ~15.9% in FY26, while deposit growth is expected at ~11–12%. This implies that competition for deposits is likely to remain elevated, and funding costs may stay firm in the near term.
Overall, the sector remains fundamentally strong but is clearly entering a more mature phase of the cycle. The focus is now shifting from asset quality improvement to margin sustainability and liability franchise strength. Going forward, the ability to manage deposit growth, maintain CASA ratios, and control funding costs will be the key factors driving performance across the banking space.
Important events & updates
A few important events of the last month and upcoming ones are as below:
- India’s gross GST collection for April 2026 hit a record ₹2.42 lakh crore, up 8.7% year on year, while net GST collections were ₹2.11 lakh crore, up 7.3%, which points to continued strength in formal economic activity and tax buoyancy..
- India’s April manufacturing PMI rose to 54.7 from 53.9 in March, showing expansion but still the second-slowest improvement in nearly four years, while input cost inflation accelerated to its highest level since August 2022.
- India’s services PMI improved more strongly to 58.8 from 57.5, and the composite PMI rose to 58.2 from 57.0, indicating that domestic demand remained solid despite global uncertainty.
- India’s HSBC Composite PMI registered 58.2 in April 2026, just shy of the flash estimate of 58.3 but higher than 57.0 in the previous month, pointing to a sustained and historically strong expansion in private sector activity. Growth remained broad-based, with both manufacturing output and services activity rising at solid rates. Total new orders rose at a faster pace, exceeding the long-run average and signaling resilient demand conditions.
- U.S. April jobs report released on 8 May. Nonfarm payrolls came in at +115,000, unemployment held at 4.3%, and wage growth cooled to 0.2% month on month and 3.6% year on year, which markets would typically read as a still-resilient labor market but with softer wage pressure.
- As on date, Middle East is in a fragile and incomplete de-escalation, not a stable resolution. Fighting has eased from peak levels, but recent exchanges of fire, continued military operations, and unresolved negotiations show that the risk of renewed escalation remains high.
- The annual inflation rate in India inched higher to 3.48% in April of 2026 from 3.4% in the previous month, marking the fastest inflation rate in one year, but coming in well below market expectations of 3.8%.
Fundamental outlook:
The near-term fundamental setup for Indian markets continues to be driven by a clear external–domestic divergence, where resilient domestic indicators are being offset by persistent global pressures, particularly from crude oil and currency movement. With Brent crude currently hovering around ~$105 per barrel, energy remains the single most important variable influencing inflation, corporate margins and overall market sentiment. Given India’s high import dependence (over 80%), elevated crude prices are estimated to increase the annual oil import bill by over $70 billion versus pre-conflict levels, keeping macro risks elevated.
This pressure is also visible on the currency front. The Indian Rupee has weakened to a record low of ~95.4 against the US dollar, amplifying imported inflation and raising input costs across sectors. The combined impact of high crude and a weak currency is now feeding into corporate cost structures, with recent PMI data explicitly highlighting fuel and energy as key cost pressures. This creates a challenging backdrop for margin sustainability, especially for sectors dependent on imports or global supply chains.
From a policy perspective, the immediate trigger remains inflation. CPI stood at 3.40% in March (vs 3.21% in February), and the upcoming April print becomes critical in assessing whether energy-led pressures are beginning to transmit meaningfully into headline inflation. While the RBI’s FY27 inflation estimate stands at ~4.6%, any sharp upside surprise could constrain policy flexibility and delay any supportive measures for growth.
Despite these external headwinds, domestic fundamentals continue to provide stability. GST collections for April came in at a record ₹2.43 lakh crore, up ~8.7% YoY. However, the composition indicates a more balanced picture, import-linked GST grew sharply at ~25.8%, while domestic GST growth was relatively moderate at ~4.3%, suggesting that consumption remains steady but not accelerating.
High-frequency indicators also point towards continued expansion in economic activity. The Composite PMI rose to 58.2 in April (from 57 in March), with Services at 58.8 and Manufacturing at 55.9, indicating that both segments remain in growth territory. While this confirms underlying resilience, it also suggests a steady-state growth environment rather than a sharp acceleration phase.
Corporate earnings have acted as an important cushion in this environment. The ongoing Q4 FY26 season has been better than initial expectations, with mid-cap companies leading the recovery ~69% of reporting companies have delivered positive earnings outcomes. Large-caps have been more selective (~50% positive), while small-caps have seen ~56% positive results. This indicates that while earnings growth is intact, it is not yet broad-based enough to fully offset macro headwinds.
Flows continue to reflect this divergence. Foreign investors remain cautious, with FII outflows of ~₹11,000 crore so far in May, driven by currency weakness and global uncertainty. In contrast, domestic investors have remained supportive, with DII inflows of ~₹21,400 crore over the same period, helping absorb selling pressure and stabilise markets.
Overall, the fundamental picture remains stable but increasingly sensitive to external variables. Domestic growth, earnings resilience and liquidity support are providing a floor to the market, but elevated crude prices, currency depreciation and margin pressures are limiting upside. As a result, the near-term outlook is likely to remain range-bound, with market direction dependent on crude trends, inflation trajectory and stability in global conditions rather than any strong domestic re-rating trigger.
Technical outlook.
The Nifty 50 is currently in a consolidation phase within a broader uptrend, but the short-term structure has weakened after slipping below the 24,000 level and trading near 23,800. While the index continues to hold above its 200-DMA (~23,776), indicating that the primary trend remains intact, the near-term bias has turned more range-bound to slightly cautious.
On the downside, the immediate support is now placed around 23,700–23,750 (close to the 200-DMA), with a stronger support band at 23,500–23,600. This lower zone remains the key demand area for the month, where buying interest is expected to emerge. A sustained break below 23,500 could open up further downside risk.
On the upside, 24,000 has now become the first resistance level, acting as a psychological as well as technical hurdle after the breakdown. Beyond this, the broader resistance zone remains at 24,500–24,750, where supply pressure is expected to persist unless supported by strong triggers.
Momentum indicators remain neutral, with RSI around ~60, suggesting consolidation rather than a sharp trend reversal.
Bank Nifty also reflects a similar setup. Immediate support is placed at 54,000, with a deeper support near 52,500. On the upside, resistance remains in the 56,500–57,000 zone, and the index needs a decisive move above this band to regain strength.
Overall, the structure now clearly points to a “range with resistance above” setup with 23,500–24,500 acting as the broader band.
Outlook for the Global Market
US Market:
The US market continues to remain firmly in an uptrend, supported by strong earnings momentum, even as macro headwinds keep the near-term outlook slightly cautious.
On the fundamental side, corporate performance remains robust, with over 80% of S&P 500 companies beating Q1 expectations. Earnings visibility for 2026 also remains strong, with projected EPS growth of ~14–16%, largely driven by sustained momentum in AI and semiconductor segments. Strong demand for memory chips continues to act as a key tailwind, keeping technology led market leadership intact and supporting elevated valuations.
However, the macro environment is turning increasingly restrictive. Rising geopolitical tensions, particularly involving United States and Iran, have pushed Brent Crude prices higher, reintroducing inflationary pressures. Inflation has remained sticky at ~3.6% YoY, and expectations of any near-term rate cuts have been significantly pushed out, with markets now pricing in a prolonged higher-rate regime as the Federal Reserve maintains a cautious stance.
Despite these concerns, market sentiment has remained strong. The S&P 500 ended April at record highs and extended its rally beyond the 7,300 mark, supported by sustained buying interest, particularly from retail investors focusing on mega-cap technology stocks. This resilience highlights that liquidity and earnings optimism are currently outweighing macro concerns.
From a technical standpoint, the index continues to trade within a well-defined ascending channel, maintaining a strong short-term uptrend. The 7,200 level now acts as a crucial support zone, backed by previous resistance and the 20-day moving average. As long as this level holds, the index is likely to drift higher towards the 7,400 psychological mark. However, the setup remains highly data-sensitive, and any upside surprise in inflation could trigger a sharp corrective move given the stretched valuations.
Overall, while the structural trend remains positive, the near-term outlook is increasingly dependent on inflation data and interest rate expectations, making this a market driven as much by macro signals as by earnings momentum.
Outlook for Gold
The gold outlook for May 2026 remains broadly range-bound with a slight positive bias, as the market transitions into a consolidation phase after the recent sharp correction.
On current levels, Gold prices in India are stabilising around ₹1.52–1.53 lakh per 10 grams, indicating that the earlier downside momentum has faded and the market is now building a base rather than entering a fresh decline. Domestic prices continue to find support from steady local demand and persistent global uncertainty.
From a technical standpoint, the structure clearly points towards a sideways trend in the near term. Immediate support is placed in the ₹1,52,000–₹1,52,800 zone, with a stronger base forming around ₹1,50,000–₹1,50,500. On the upside, resistance remains capped at ₹1,53,800–₹1,54,500, and only a decisive breakout above this range can open a move towards ₹1,56,000–₹1,58,000. Until then, price action is likely to remain confined within this broader band.
On the macro side, key triggers remain US inflation and interest rate expectations guided by the Federal Reserve. The upcoming CPI data is particularly critical—any upside surprise could strengthen the dollar and limit gold’s upside, while a softer print may revive rate-cut expectations and provide support. Additionally, ongoing geopolitical tensions, especially involving United States and Iran, continue to offer a safe-haven cushion to prices.
Overall, the broader expectation remains a flat to mildly positive trend. Gold is likely to trade in a consolidation range of ₹1,50,000 to ₹1,58,000 in the near term, with a buy-on-dips approach favoured as long as prices sustain above the key ₹1,50,000–₹1,52,000 support zone.
What can Investors do?
The overall outlook for Indian markets remains constructive from a medium-term perspective, although the near-term environment has turned more volatile and externally driven. The underlying domestic growth story continues to hold firm, supported by strong macro indicators, healthy earnings trends and consistent domestic liquidity.
Economic fundamentals remain a key strength. Growth expectations for FY27 are in the ~6.8%–7.2% range, indicating sustained momentum in the economy. High frequency indicators also support this view GST collections touched a record ₹2.43 lakh crore in April (~8.7% YoY), while PMI data remains firmly in expansion territory (Composite ~58.2), reflecting steady activity across manufacturing and services. Demand indicators such as auto sales and formal sector activity continue to show resilience, suggesting that consumption is stable rather than slowing.
Corporate earnings are providing an additional layer of support. The Q4FY26 season has broadly met expectations, with overall earnings growth for the year estimated at ~12%–15%. While this indicates that the earnings cycle remains intact, there are early signs of margin pressure emerging due to higher input and logistics costs, which could limit the pace of upgrades going forward.
The key overhang continues to be external. Elevated crude prices in the ~$105–$113 range remain a concern for an import dependent economy, contributing to a higher import bill and putting pressure on the rupee, which has weakened to ~95.4 against the US dollar. This combination is creating a cost-push environment, with rising input costs beginning to reflect across sectors and in inflation expectations.
Broadly, the market is currently in a phase where strong domestic fundamentals are being offset by global uncertainties. The absence of a clear positive trigger on the external front is keeping sentiment cautious, even as the underlying growth environment remains healthy.
The broader trend remains intact, but the near-term is likely to stay volatile and consolidation-driven. It is not a phase for aggressive positioning, but rather for a calibrated approach staying invested, using volatility to gradually build exposure, and focusing on areas driven by domestic demand and relatively insulated from global disruptions.
Investors are advised to consult their financial advisors before making any investment decisions. This view does not constitute investment advice.
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