In a week of AI turmoil, surging US bond yields and inflation above the RBI’s limit, the Nifty kept rising, helped by steady foreign buying and a sharp fall in oil. The rally is slowing, though, and the market is getting more selective.
If you had been told on Monday what this week would bring, you might have expected Indian stocks to fall.
The world’s most important AI company lost its founder and chief executive. US bond yields had their sharpest rise in more than a year, as markets bet on more Federal Reserve rate increases. India’s inflation crossed the RBI’s 6% limit. And hopes of a quick US-Iran peace deal faded.
Instead, the Nifty rose. It closed at 25,299 on Thursday, up about 1.1% from last Friday’s close of 25,030 (our calculation). That extends a rally that began on 30 October, when the index stood at 23,053. It has gained nearly 10% since then.
What held the market up
Foreign money kept coming. Foreign investors bought a net ₹7,831 crore of Indian shares on Thursday, according to provisional exchange data, taking their November buying to about ₹73,500 crore in nine sessions (our calculation). After a year of record selling, they are rebuilding positions in India.
Oil kept falling. Brent crude has dropped about 21% this month, to around $92 a barrel. For an economy that imports most of its oil, that eases pressure on inflation, the rupee and company costs.
The growth story got a boost. Moody’s raised its forecast for India’s growth this year to 7% from 6.5%, saying the economy had handled the oil shock better than expected.
The market is getting choosier
The pace of gains is slowing. After sharp rises earlier in the rally, the Nifty edged up only about 0.2% on Thursday, after swinging between gains and losses.
Leadership is shifting too. Banks were strong all week, with the Bank Nifty rising 1.2% on Thursday to 61,518. Real estate stocks jumped nearly 4% on Thursday, as lower oil and hopes of easing inflation improved sentiment. Railway stocks surged early in the week, then cooled. Defence stocks slipped after disappointing margins at Bharat Dynamics and HAL.
Domestic institutions, mainly mutual funds and insurers, have been selling steadily, taking profits as foreign money comes in. That split is worth watching. When foreign funds are the main buyers, the market becomes more sensitive to global events.
The trend to watch
The broader trend remains positive, but the risks are building. US bond yields are rising as the Federal Reserve prepares to raise rates, and higher US rates can pull foreign money back home. India’s own inflation means the RBI is likely to raise rates in December. And oil’s fall depends on diplomacy that has stalled.
For investors, the message from this week is that India’s market is being driven by flows and oil. As long as foreign buying continues and crude stays low, the rally has support. A reversal in either would test it, of course.
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