IT Sector Defies Market Gravity
The NIFTY IT index surged 4.23% to 31,116.55, standing out sharply against a broadly cautious market where NIFTY 50 gained just 0.43% to 23,483.55 and SENSEX added 0.52% to 74,649.84. News of Infosys shares rallying nearly 10% over three days — as investors reassess valuations following an AI-driven correction — captures the sentiment shift underway in the sector. Alphabet's announced $80 billion equity raise for AI infrastructure, anchored by a fresh $10 billion from Berkshire Hathaway, is providing a powerful global tailwind that is reframing how markets perceive India's IT exporters.
RBI Policy: A Razor-Edge Call
The Reserve Bank of India's Monetary Policy Committee meets this week against a deeply complicated backdrop: crude oil at $96.01 per barrel (+1.08%), a rupee under structural pressure trading around 95.25 against the dollar, and West Asia tensions that show no signs of resolution. One forecast cited in the news suggests India's CPI inflation could rise to 4.8% by FY27 if crude averages $90 per barrel — a scenario that constrains the RBI's room to ease aggressively. Indian government bonds have barely moved as traders sit on their hands, reflecting genuine uncertainty about which direction the MPC will lean between supporting growth and anchoring inflation expectations.
FII Exodus: A Decade Unwound
Foreign institutional investor selling has now erased ten years' worth of cumulative net equity inflows into India, with net FPI investments reported at Rs 7.3 lakh crore as of June 1 — the lowest since 2016. Rising oil prices, growth concerns, and a global capital rotation toward AI-linked markets — most visibly South Korean chipmakers — are cited as the driving forces. India has also slipped to seventh place in global market cap rankings, with South Korea's AI-fueled rally pushing its combined listed market value to $5.01 trillion, ahead of India's $4.85 trillion on the NSE.
IPO Pipeline Builds Momentum
India's primary market is showing considerable activity even as secondary markets face headwinds. Oyo's parent Prism has received SEBI approval for a Rs 6,650 crore IPO, while Coca-Cola is exploring a 2027 listing for its Indian bottling unit Hindustan Coca-Cola Holdings — a business that reported sales of Rs 50 billion in FY25, its highest in at least four years, with Rothschild & Co appointed as adviser. Meanwhile, NHPC shares fell nearly 5% as the government launched an OFS to divest up to 6% at Rs 71 per share, an approximately 8% discount to the prior close — a reminder that government divestment supply can create near-term price discovery pressure even in fundamentally sound PSUs.
Q4 Earnings Season: A Strong Finish
India's Q4 earnings season has concluded on a broadly constructive note, with the news highlighting ten large-caps — including Vedanta, JSW Steel, Tata Steel, Mahindra & Mahindra, Muthoot Finance, and BPCL — reporting significant year-on-year profit and revenue growth. This widespread outperformance across metals, energy, financials, and auto sectors suggests that corporate India's fundamentals remain more resilient than the recent market selloff might imply. The divergence between strong earnings and weak foreign flows is a tension that thoughtful investors will want to understand in its full context.
Global Cues: Mixed Signals Ahead
US equity indices closed in narrow positive territory — Dow Jones at 51,226.2 (+0.29%), S&P 500 at 7,607.63 (+0.10%), and NASDAQ at 27,090.33 (+0.01%) — but the more significant signal came from rising US Treasury yields after stronger-than-expected manufacturing and construction data, which has pushed back Federal Reserve rate-cut expectations and amplified inflation fears. The Hang Seng's strong 2.52% gain to 26,038.32, driven by AI and tech momentum, contrasts with the Nikkei's modest 0.30% decline, underscoring that the global AI capital rotation is not uniform and that emerging market flows remain highly selective.