Indian equity markets ended Monday's session on a firm note, extending their recent rally as investors welcomed strong first-quarter business updates from leading private sector banks, while softer crude oil prices, favourable monsoon conditions and sustained foreign institutional inflows continued to underpin market sentiment. The gains reflected growing optimism that domestic economic fundamentals remain resilient despite lingering global uncertainties.
The benchmark BSE Sensex closed 428 points, or 0.55 per cent, higher at 78,192. The NSE Nifty 50 advanced 152 points, or 0.63 per cent, to settle at 24,423. Both indices recorded their fourth straight session of gains, with buying interest concentrated in banking, financial and select consumer-oriented stocks.
The banking sector emerged as the biggest driver of the day's rally after several lenders reported encouraging business updates for the April-June quarter. HDFC Bank led the gains after announcing healthy growth in advances and deposits, reinforcing investor confidence in the country's largest private sector lender. Axis Bank also moved higher after reporting robust loan growth, signalling sustained credit demand across retail and corporate segments. In contrast, Kotak Mahindra Bank came under pressure after its quarterly update pointed to relatively slower growth in loans and deposits, prompting investors to book profits in the stock.
Market participants viewed the banking updates as an encouraging start to the corporate earnings season, with expectations that healthy credit growth and improving asset quality will continue to support the sector's profitability. Banking and financial stocks consequently accounted for a significant share of the day's gains and lifted the broader indices.
"Indian equity markets began the week on a positive note, supported by subdued crude oil prices, easing geopolitical tensions and growing expectations of a less hawkish monetary policy stance from the US Federal Reserve. The rally was broad-based, with real estate, oil & gas, automobiles and consumer durables emerging as the top-performing sectors, each advancing around 1% during the session, as buying interest remained widespread across the market," said R Ponmudi, CEO, Enrich Money, a SEBI - registered online trading and wealth tech firm.
Sentiment also received support from easing international crude oil prices, which are expected to reduce inflationary pressures and improve India's macroeconomic outlook. Lower energy costs are seen as positive for both corporate profitability and the country's current account balance, providing additional comfort to investors.
Another supportive factor was the progress of the southwest monsoon. With rainfall remaining largely on track across key agricultural regions, investors expect improved kharif sowing, stronger farm incomes and a gradual recovery in rural consumption during the second half of the financial year. These expectations boosted interest in consumer-oriented companies that stand to benefit from improving demand in rural markets.
Foreign institutional investors continued to remain net buyers, extending the trend seen over recent sessions. Steady overseas inflows, combined with consistent participation from domestic institutional investors, have helped absorb intermittent bouts of profit booking and provided stability to the market despite mixed global cues.
Broader market performance was also positive, although gains in the mid-cap and small-cap segments were relatively measured compared with frontline indices. Investors remained selective, favouring companies with strong earnings visibility and healthy balance sheets ahead of the June-quarter results season.
Among individual stocks, HDFC Bank was one of the top contributors to the Sensex and Nifty gains after reporting double-digit growth in advances. Axis Bank also attracted strong buying interest following its business update. Shares of Nykaa's parent company, FSN E-Commerce Ventures, advanced after the company indicated healthy revenue growth for the quarter, reflecting continued strength in demand across its beauty and personal care business.
Despite the overall positive sentiment, market experts cautioned that stock-specific movements are likely to dominate in the coming weeks as companies begin announcing their June-quarter earnings. Investors will closely monitor management commentary on demand trends, margin outlook and capital expenditure, while also tracking the progress of the monsoon, crude oil prices, foreign investment flows and developments in global monetary policy.
The day's performance reinforced confidence in the resilience of Indian equities, with strong domestic fundamentals continuing to offset concerns arising from the global economic environment, they said. While valuations in certain segments remain elevated, investors appear willing to maintain exposure to equities on expectations that healthy corporate earnings, stable macroeconomic indicators and sustained domestic liquidity will continue to support the market in the near term.