Sensex gains 0.65% as metals and financials steady Indian equities

Indian equities ended the week with a relief session after four consecutive days of losses. The Friday recovery followed a strong Wall Street session and firmer Asian markets, while easing expectations of an imminent US Federal Reserve rate hike improved the tone. The rebound remained selective: metal, private-bank and oil-related shares provided support, while weakness in technology, healthcare and other rate- or growth-sensitive pockets limited the broader advance.

The week’s risk balance was shaped by two opposing forces. Softer global bond yields and domestic institutional demand supported valuations, while higher oil prices, renewed US-Iran tensions and elevated government-bond yields kept traders cautious. The Nifty’s Friday close was near 23,900, but the session’s gains did not erase the pressure accumulated earlier in the week.

Tata Steel was among the main index supports on Friday, aided by the broader move in metals. Reliance Industries, Bajaj Finance, HDFC Bank, Kotak Mahindra Bank, Adani Ports, UltraTech Cement, Titan, Trent and Hindustan Unilever were also reported among the major Sensex gainers. Traders attributed the financial-sector support to selective buying after the recent decline, rather than to a broad re-rating of banks.

IT stocks were a drag on the week’s risk appetite even though some technology names recovered during parts of Friday’s session. The sector remained sensitive to US rate expectations and the outlook for overseas technology spending. Pharma and healthcare shares were also under pressure; the market’s explanation was a combination of sector-specific selling and the preference for cyclicals and financials during the relief move.

The market’s internal divergence was important. Metals and infrastructure-linked shares benefited from expectations around industrial activity and public investment, while insurance and non-bank financial companies drew support from financial-sector buying. Telecom and internet stocks lagged, with traders pointing to profit-taking and a less favourable response to pockets of high-growth technology exposure. These explanations are market interpretations, not company-confirmed causes.

India’s economy grew 7.8% year-on-year in the April-June 2026 quarter, according to the Ministry of Statistics and Programme Implementation. The result exceeded the Reserve Bank of India’s 7% projection and the 7.1% to 7.2% median forecast in a Reuters poll of 58 economists. Manufacturing expanded 9.2%, while gross value added increased 8.2%. The data supported the domestic-growth narrative, although the market response was moderated by oil and global-rate risks.

Industrial production grew 6.7% year-on-year in July 2026, down from 8.8% in June, according to government data. August’s manufacturing PMI fell to 52.8 from 53.5 in July, its third consecutive monthly decline and its weakest reading in five years. The services PMI rose to 54.1 in August from 53.3 in July, while the composite PMI was 54.3. Taken together, the releases indicate that growth remained expansionary but lost momentum in manufacturing.

The Reserve Bank had notified a Rs 6 lakh crore, 15-day variable-rate reverse-repo operation to absorb surplus liquidity, with reversal scheduled for September 15. The measure matters for banks and money-market conditions because it removes part of the liquidity created by foreign-exchange operations and other flows. SEBI was also reported to be discussing refinements to futures-and-options risk warnings on brokerage platforms, while the Finance Ministry notified a change allowing FDI-backed e-commerce companies to hold India-made inventory for export purposes; domestic inventory-based business-to-consumer sales remain barred.

Global markets helped Indian equities recover at the end of the week. Federal Reserve Governor Christopher Waller signalled that he could support keeping rates unchanged if inflation continued to cool, reducing market expectations of a September hike. US equities rallied, Asian markets followed, and Treasury yields pulled back from the week’s highs. The relief was supportive for emerging-market risk appetite, but it did not remove the sensitivity of Indian assets to US data and policy communication.

Brent crude remained elevated because renewed US-Iran tensions raised concerns about supply through the Strait of Hormuz. That is a negative macro variable for India because it can widen the import burden, pressure inflation expectations and complicate the outlook for bonds and the rupee. The dollar softened as rate-hike expectations eased, while gold benefited from the weaker dollar and demand for a hedge against geopolitical and policy uncertainty.

Foreign flows were volatile. FIIs were net buyers of Rs 1,143 crore on September 1 and Rs 6,688 crore on September 2, according to provisional exchange data, but were net sellers of Rs 3,112 crore on September 4. DIIs were net buyers of Rs 1,847 crore on September 1, Rs 2,813 crore on September 2 and Rs 8,930 crore on September 4. The pattern suggests that domestic buying provided a cushion even as foreign participation remained sensitive to oil, yields and global risk pricing.

Corporate news was concentrated in order wins and business updates rather than a fresh large-cap earnings cycle. Power Grid won two transmission bids valued at Rs 1,152.49 crore per annum in Gujarat and Rs 3,244 crore per annum for an HVDC project. The company also acquired the entire stake in Fatehgarh II Transmission for Rs 19.11 crore. The reported developments add to its transmission pipeline, although the market response also reflected wider concerns about bond yields and financing costs.

Sical Logistics secured a Rs 534.73 crore order from Central Coalfields for heavy earth-moving machinery hiring in coal extraction. Marine Electricals reported purchase orders worth Rs 229.73 crore, excluding taxes, from Digital Edge DC for power-distribution systems, following Rs 398.81 crore of orders announced the previous day. Cipla secured exclusive US rights for the Keytruda biosimilar QL2107 from Qilu Pharmaceutical and signed a licensing agreement for HER2 ADC TQB2102 in emerging markets.

Milky Mist Dairy Food reported consolidated first-quarter FY27 profit of Rs 64.7 crore, against Rs 6.5 crore a year earlier, while revenue rose to Rs 973.4 crore from Rs 678.1 crore. No market consensus was available in the material for that result. KSH International reported first-quarter FY27 revenue of Rs 1,164.24 crore, up 108.38% year-on-year, and net profit of Rs 42.22 crore, up 86.15%; the company had scheduled an analyst and investor meeting for September 4. These company-specific figures indicate pockets of strong operating growth, but they were not large enough to override the week’s macro drivers.

The primary market remained active. ESDS Software Solution’s public issue closed during the week and the shares were scheduled to list on September 4. Deepa Jewellers’ issue ran from September 1 to September 3, while the week also saw listings of Annu Projects and Lumino Industries earlier in the week, according to the reported IPO calendar.

Block activity included the reported sale of Meesho shares by SVF II Meerkat at Rs 206.30 each, with institutional buyers taking part, and the sale of Gland Pharma shares by Fosun Pharma Industrial to mutual-fund buyers. The transactions add to the week’s evidence of continued primary and secondary-market supply, even as domestic institutions absorbed shares in the cash market.

The immediate market watch is likely to remain centred on oil, US labour-market and inflation signals, Treasury yields and the durability of domestic institutional support. The manufacturing slowdown and the high-growth GDP print provide different signals about the economy; the next move in equities will depend on which of those signals markets treat as more relevant alongside global risk pricing.