Indian stock indices rose to 10-week highs on Monday, fueled by a 3.6% jump in HDFC Bank shares after strong June quarter business numbers. Falling crude oil prices and signs of returning foreign investor interest also supported the market rally.
Indian stock markets started the week on a high note, with the Nifty 50 and Sensex both climbing 0.7% on Monday to reach their highest levels in ten weeks. The Nifty closed at 24,430, while the Sensex ended the day at 78,285. This momentum comes after a four-session streak where benchmarks gained roughly 2.4%, signaling a potential shift in investor sentiment after a period of selling.
A key driver of this market optimism is HDFC Bank, which reported a 15.4% increase in gross advances for the quarter ending in June. Investors reacted positively to these figures, pushing the stock price up by 3.6%. While HDFC Bank provided a significant lift, the banking sector saw mixed results. Other lenders like IndusInd Bank, Bandhan Bank, and Karur Vysya Bank also saw gains, rising between 3.4% and 4.2%. However, the broader banking index was held back by a 3.9% decline in Kotak Mahindra Bank, which reported softer growth for the April-June period. Additionally, state-owned lenders faced continued pressure, falling for the third consecutive session with a 0.9% decline.
The broader market sentiment was further helped by a drop in global crude oil prices, which have retreated to February levels. Lower energy costs are generally viewed as a positive for the Indian economy, as they can help reduce inflation and support corporate profit margins. Furthermore, reports of a narrowing rainfall deficit have eased concerns regarding the rural economy, while early signs suggest that foreign institutional investors are beginning to show renewed interest in Indian equities after a sustained period of staying on the sidelines.
Investors looking ahead will likely focus on how these quarterly business updates translate into actual bottom-line profitability when banks release their full financial results. The impact of the recent decline in oil prices on broader inflation numbers and subsequent Reserve Bank of India policy expectations will also remain important. For the banking sector specifically, the market will monitor whether the growth trends seen in private lenders can sustain momentum against the current challenges faced by public sector banks.