Indian benchmarks Nifty and Sensex rose today as IT shares provided support against a global selloff triggered by higher-than-expected US inflation. While metal and energy sectors faced pressure from elevated crude oil prices, strong buying by domestic institutional investors helped offset the impact of foreign capital outflows.
Indian equity markets showed resilience on Thursday, with the Nifty and Sensex recording gains even as global sentiment turned cautious. The Nifty index rose by 0.32 percent, while the Sensex added 281 points. The performance was led by the Information Technology sector, which provided a buffer against negative cues from international markets. Investors appear to be positioning themselves ahead of the upcoming quarterly earnings season, betting on the sector's long-term stability.
Major IT companies, including HCL Technologies, Infosys, and Tata Consultancy Services, saw notable gains. IT stocks often act as a defensive bet for investors during times of global uncertainty. Because these companies generate a significant portion of their revenue in foreign currencies like the dollar, they are often viewed as a hedge when domestic economic conditions face pressure. Market analysts suggest that positive expectations for financial results in the coming quarters are contributing to this sentiment.
Global pressures, however, remain a concern for the broader market. Hotter-than-expected US inflation data, with the September consumer price index rising to 3.7 percent against a consensus of 3.6 percent, has fueled speculation about further interest rate hikes by the Federal Reserve. This has created a ripple effect, with major Asian indices such as the Nikkei 225 and KOSPI experiencing significant losses as investors turn risk-averse.
This global anxiety has led to a sector-specific divergence in India. While IT stocks thrived, metal and energy stocks bore the brunt of the selling pressure. Geopolitical tensions in the Middle East have pushed crude oil prices near 105 dollars a barrel, which increases operating costs for many industrial companies and fuels inflation concerns domestically. Shares of Adani Enterprises and Adani Ports faced selling pressure, reflecting the broader unease in commodity-linked sectors.
Market stability is currently being supported by a tug-of-war between institutional investors. Foreign institutional investors remain cautious, selling approximately 1,857 crore rupees worth of equities in the previous session as global interest rate fears persist. However, domestic institutional investors continue to play a stabilizing role, purchasing 2,670 crore rupees worth of equities to mitigate the impact of the foreign outflows. This consistent domestic buying has been a key factor preventing a sharper market correction.
Looking ahead, investors are focusing on the upcoming quarterly results from Wipro, Tech Mahindra, Nestlé India, and HDFC Life. These reports will be critical in determining whether companies can maintain profit margins and revenue growth despite the global headwinds. The market will also continue to watch crude oil prices and any further signals regarding US interest rates for signs of sustained volatility.