Indian equity markets ended Thursday’s session on a subdued note after witnessing sharp volatility through the day, as investors turned cautious following the previous session’s strong rally. Benchmark indices struggled for direction amid profit-booking in heavyweight banking and information technology stocks, although strength in automobile shares and broader markets helped limit the downside.
The BSE Sensex closed marginally lower (114 points) at 77,844.52, while the NSE Nifty 50 settled near the flat line at 24,326.65. Markets had opened on a positive note, encouraged by easing global crude oil prices and improving sentiment in Asian equities. However, the momentum weakened as traders locked in gains in several frontline counters after Wednesday’s strong upmove.
The broader market continued to display resilience despite the lacklustre performance of benchmark indices. Mid-cap and small-cap shares outperformed large-cap stocks, reflecting sustained investor appetite for domestic growth-oriented sectors. Market breadth remained positive for most of the session, suggesting that buying interest persisted beyond the benchmark-heavy sectors.
Automobile stocks emerged as the strongest performers during the day, supported by optimism surrounding demand recovery, improving rural sentiment and continued interest in electric vehicle-related themes. Shares of major automobile manufacturers gained after investors responded positively to earnings expectations and sales outlook. The auto sector’s strength also reflected confidence that lower fuel prices could support consumption trends in the coming months.
On the other hand, banking and information technology shares witnessed selective selling pressure. Financial stocks saw profit-booking after recent gains, while IT companies remained under pressure amid concerns over global economic uncertainty and slower technology spending in overseas markets. Fast-moving consumer goods shares also traded mixed as investors assessed margin pressures and rural demand trends.
Investor sentiment remained closely tied to global developments throughout the trading session.
"The markets traded largely flat as investors awaited Iran's response to the US peace proposal, maintaining a cautiously optimistic tone through the day. The Nifty consolidated, closing nearly unchanged as markets paused for confirmation before extending the momentum," said R Ponmudi, Chief Executive Officer at Enrich Money, a a SEBI - registered online trading and wealth tech firm.
On Thursday, energy markets extended their decline as markets remained optimistic that a near-term peace deal would lead to a reopening of the Strait of Hormuz, through which a fifth of the world's crude and LNG supplies pass, providing meaningful relief to the current global energy crisis. Crude oil fell over 3.5%, trading in the $92–$94 zone, while domestic crude futures slid below Rs 8,800, as Trump's optimistic remarks on a deal and Iran's active review of the US proposal continued to drive expectations of easing supply disruptions.
Meanwhile, the rupee strengthened further against the US dollar, with USD/INR retreating to the Rs 94–94.3 range from recent highs near Rs 95.4, as easing macroeconomic uncertainty reduced safe-haven dollar demand and provided near-term relief to India’s import bill and inflation outlook. That said, the currency remains at elevated levels with domestic pressures persisting, as reflected by continued FII outflows, though robust DII buying provided a meaningful offset, cushioning the broader market impact.
The traders remained cautious due to persistent weakness in the rupee against the US dollar. Currency pressure continued to influence foreign investor sentiment, particularly in sectors dependent on imports or overseas funding. Market participants also monitored developments in global bond yields and the outlook for interest rates in major economies, as these factors continue to shape capital flows into emerging markets such as India.
Corporate earnings remained another important driver of market activity. Stocks that delivered strong quarterly numbers or optimistic guidance attracted buying interest, while companies reporting weaker margins or cautious outlooks faced pressure. Investors remained selective, favouring businesses perceived to have stable earnings visibility and strong domestic demand exposure.
Analysts observed that the Indian market is currently moving through a consolidation phase after recovering from earlier corrections in 2026. While domestic economic indicators continue to remain relatively stable, concerns over global growth, geopolitical tensions and external market volatility are preventing aggressive risk-taking. At the same time, resilience in retail participation and steady flows into domestic investment avenues are helping the market avoid sharp declines.
"In the near term, markets will remain highly sensitive to headline risk with volatility contingent on developments out of the Gulf, most critically Iran's response to the US peace proposal and the potential reopening of the Strait of Hormuz. Either outcome carries the potential to move markets sharply given the conflict's broad-based impact on global risk assets and energy prices, with tangible progress toward a resolution providing the foundation for a further and more sustained improvement, while any deterioration risks a swift reversal of the gains built over recent sessions," Ponmudi added.