Indian equity markets ended the week on a positive note, supported by strong Q1FY27 earnings from leading IT and financial companies, improved global risk sentiment and optimism surrounding the implementation of the India–UK Comprehensive Economic and Trade Agreement (CETA). During the week, the Sensex advanced 582.06 points (0.75%) to close at 78,151.45, while the Nifty 50 gained 127.40 points (0.52%) to settle at 24,334.30. However, broader markets witnessed some profit booking, with the BSE Midcap Index declining marginally by 0.05% and the Smallcap Index falling 0.80%. Investor sentiment remained supported by healthy corporate earnings and policy initiatives aimed at strengthening manufacturing, exports and semiconductor production. Nevertheless, the rally was partially capped by rising inflation, widening merchandise trade deficit and delayed monsoon progress, which have increased concerns over food inflation and the Reserve Bank of India's future policy stance. Technically, Nifty support is placed at 23,800–23,600, while immediate resistance is seen around 24,600–24,750.
Global markets delivered a mixed performance during the week as investors balanced encouraging inflation data with rising geopolitical tensions in the Middle East. In the United States, softer-than-expected CPI and PPI readings strengthened expectations of a less aggressive Federal Reserve policy, although semiconductor stocks witnessed heavy selling amid concerns over increasing competition from Chinese AI companies. For the week, the Dow Jones declined 0.9%, the S&P 500 fell 1.6%, while the Nasdaq Composite dropped 2.9%. European markets remained relatively resilient, supported by improving economic activity in the UK, where GDP expanded 0.1% during May despite higher energy costs. Meanwhile, China's economic growth slowed to 4.3% in the second quarter, below market expectations, highlighting continued weakness in domestic demand despite ongoing policy support. Across Asia, investors remained focused on China's slowing economy, South Korea's unexpected interest rate hike and persistent geopolitical risks. Overall, global markets remain highly sensitive to inflation trends, monetary policy expectations and developments surrounding the US-Iran conflict.
Geopolitical tensions escalated sharply during the week after Iran intensified attacks on US military assets and regional infrastructure, while the United States continued military operations across several strategic locations. The fragile ceasefire effectively collapsed, leading to renewed concerns over energy security and shipping disruptions through the Strait of Hormuz, which handles nearly one-fifth of global crude oil trade. The prolonged conflict has increased uncertainty across global financial markets and has raised concerns regarding higher inflation, supply chain disruptions and slower global economic growth. For India, prolonged geopolitical tensions could lead to elevated crude oil prices, higher import costs, pressure on the rupee and increased inflationary risks, making geopolitical developments one of the most closely watched factors in the coming weeks.
Crude oil prices recorded a strong weekly gain as escalating geopolitical tensions in the Middle East significantly increased supply disruption concerns. Brent crude settled around US$88.10 per barrel, while WTI crude closed near US$82.49 per barrel, with both benchmarks gaining around 4–5% during the week. Market participants remained concerned over attacks on energy infrastructure and disruptions in tanker movement through the Strait of Hormuz. Higher crude prices are particularly significant for India, as they may widen the current account deficit, increase imported inflation, pressure corporate margins and limit the RBI's flexibility to ease monetary policy. Unless geopolitical tensions ease, crude oil is likely to remain highly volatile and continue influencing global equity markets.
India's macroeconomic indicators continued to reflect underlying economic resilience despite emerging inflationary pressures. Merchandise exports grew 15.5% year-on-year in June, although imports rose at a faster pace of 31%, widening the trade deficit to US$30.43 billion. Retail inflation accelerated to 4.38%, while food inflation increased to 5.32%, reflecting higher food and fuel prices amid delayed monsoon conditions. Wholesale inflation also remained elevated at 9.87%, supported by higher prices of food articles, petroleum products and basic metals. On the positive side, bank credit growth remained robust at approximately 18.5% year-on-year, while the government continued strengthening long-term growth through initiatives including the India Semiconductor Mission 2.0 and export promotion measures for MSMEs. Although inflation remains a near-term concern, India's structural growth drivers continue to support a constructive medium-term economic outlook.
The implementation of the India–United Kingdom Comprehensive Economic and Trade Agreement (CETA) marks one of India's most significant trade reforms in recent years. The agreement provides zero-duty access for nearly 99% of Indian exports, substantially improving India's competitiveness in one of its largest export markets. Labour-intensive sectors including textiles, leather, engineering goods, gems & jewellery, marine products and processed foods are expected to benefit significantly. The agreement also creates new opportunities for India's services sector, including IT, financial services, education and professional services, while facilitating greater mobility for skilled professionals. Over the medium to long term, the pact is expected to boost exports, attract higher foreign investments, strengthen MSMEs and further integrate India into global supply chains.
Indian equity markets are expected to remain resilient, supported by healthy corporate earnings, improving domestic macroeconomic fundamentals and long-term growth opportunities arising from structural reforms and the India–UK Free Trade Agreement. The ongoing Q1FY27 earnings season will remain the key market catalyst, with investors closely tracking management commentary for insights into demand trends, margin outlook, capital expenditure plans and sector-specific growth prospects. On the technical front, the Nifty is expected to trade within the 23,800–24,600 range. A decisive move above 24,600 could pave the way for further upside, while 23,800 is likely to act as an important support level. Domestically, market participants will monitor the HSBC Manufacturing, Services and Composite PMI data, along with India's latest foreign exchange reserves, for indications on economic momentum. Globally, investors will focus on China's Loan Prime Rate decision, US ADP employment data, crude oil inventory figures, flash Manufacturing and Services PMI readings, housing market data and developments surrounding the US-Iran geopolitical situation. Crude oil price movements, geopolitical developments and evolving inflation expectations will continue to influence global market sentiment.
Although near-term volatility may persist due to earnings announcements and global macroeconomic uncertainties, India's economic fundamentals remain robust, supported by strong domestic demand, policy continuity and improving investment activity. In this environment, maintaining a disciplined investment approach focused on fundamentally strong companies, sectors benefiting from structural policy support and businesses with sustainable earnings visibility is expected to generate superior long-term returns.