Nifty gains 0.1% as metals and financials offset oil and global-rate pressure

Indian equities finished a volatile week with a late-session recovery on Friday, but the broader tone remained cautious. Traders linked the pressure earlier in the week to higher crude prices, rising global bond yields and renewed US-Iran tensions. The Friday rebound followed softer US yields and reduced expectations of an imminent Federal Reserve rate hike, although the recovery was selective.

The market’s resilience was supported by domestic growth data and continued domestic institutional buying. The offset was persistent foreign selling and concern that expensive energy would feed into inflation, the external balance and corporate costs. The immediate implication for Indian assets is a wider gap between strong domestic activity and a less supportive global risk backdrop.

The Friday advance was led by Tata Steel, Reliance Industries, SBI Life Insurance and HDFC Life Insurance, with private-bank and oil-and-gas shares also providing support. Market reports attributed the metals move to firmer global commodity prices and an improving demand outlook. The financial-sector advance reflected selective buying in insurers and private banks after the earlier rise in yields had pressured risk appetite.

The gains were capped by HCL Technologies, Bharti Airtel and Maruti Suzuki. IT shares remained sensitive to US rate expectations and global demand uncertainty, while weakness in pharma and healthcare reflected sector-specific selling rather than a single new policy trigger identified in the available material. Telecom and internet shares also lagged, with Bharti Airtel among the named large-cap decliners.

The sector split matters because it shows that the week was not a broad-based risk-on move. Metals and selected financials absorbed index pressure, while export-linked technology and defensive healthcare did not provide the same support. That leaves the market particularly exposed to the next moves in crude, US yields and foreign flows.

The Reserve Bank of India absorbed more than Rs 6.02 lakh crore through two three-day variable-rate reverse-repo auctions on September 4. Banks parked Rs 5,41,975 crore in one auction and Rs 60,419 crore in another, with both clearing at 5.24%. Reported banking-system surplus liquidity reached Rs 10.32 lakh crore, while the repo rate remained 5.25%.

The RBI operation signals that liquidity management, rather than an immediate change in the policy rate, was the central focus for money markets. Short-term rates had been pulled below the policy rate by the surplus, while the high liquidity backdrop continued to support financial conditions even as longer-term bond yields remained sensitive to crude and US Treasuries.

SEBI said it planned to review the derivatives settlement methodology at expiry amid concerns about using the closing-auction-session price as the settlement basis. Capital-market stocks including BSE, Groww, Angel One, Motilal Oswal Financial Services, Kfin Technologies and CDSL drew buying interest after the announcement.

Global cues were mixed. US and Asian equities strengthened on Friday after Federal Reserve Governor Christopher Waller adopted a less restrictive tone and markets reduced the probability of an immediate US rate hike. The relief was limited by the conflict involving the US and Iran, which kept crude prices elevated and pushed up the week’s inflation risk.

Brent crude was reported to have risen more than 7% during the week, while the US dollar and Treasury yields remained important transmission channels for Indian assets. The benchmark US 10-year yield was reported around 4.77% before later firming after stronger US jobs data, while the dollar index was near 99.17 in end-week global-market reporting. Higher US yields reduce the relative appeal of emerging-market assets and add pressure to Indian borrowing costs.

Foreign institutional investors remained sellers, with provisional net selling of Rs 3,111.94 crore on September 4. Domestic institutions bought Rs 8,930.12 crore, their 19th consecutive session of net buying according to reported data. The flow pattern explains why domestic support could cushion, but not fully reverse, the pressure from oil, global rates and overseas selling.

The most important domestic data point was real GDP growth of 7.8% year-on-year in Q1 FY27, against the RBI’s earlier quarterly estimate of 7.0% and 6.9% in Q1 FY26. Real GVA grew 8.2% year-on-year, nominal GDP grew 10.3%, and manufacturing expanded 9.2%. The quarter-on-quarter comparison was less strong: growth was 8.6% in the January-March quarter.

The Finance Ministry said the Q1 result augured well for the rest of FY27. The data strengthened the case for domestic-demand resilience, but it did not remove the market’s concern about the impact of expensive energy and external uncertainty on later quarters.

August GST collections rose nearly 15% year-on-year to just under Rs 2 lakh crore, while the manufacturing PMI fell to 52.8 in August from 53.5 in July, its weakest reading in five years. The services PMI improved to 54.1 from 53.3, but was still described as near a four-year low. The combination points to firm tax activity alongside a slower and more cautious private-sector expansion.

Corporate news was driven more by orders, ratings and competitive positioning than by a large set of fresh benchmark-company earnings. Power Grid was declared the successful bidder for a 7,500-megawatt renewable-energy-zone transmission project in Gujarat and also won an HVDC transmission project; the combined annual transmission bids were reported at Rs 4,396 crore. RVNL emerged as the lowest bidder for a Rs 404.88 crore East Coast Railway project.

India Ratings upgraded SAIL’s issuer and public-deposit ratings to AA+ with a stable outlook from AA with a stable outlook. JCR upgraded IRFC’s long-term issuer credit rating to A- with a stable outlook from BBB+ and raised HUDCO’s long-term foreign- and local-currency issuer ratings to A- from BBB+.

UltraTech Cement’s entry into wires and cables with its Rs 1,800 crore Ultravolt brand weighed on sentiment in the established wires-and-cables group. JPMorgan retained an overweight view on Polycab but said the launch was sentiment-negative and unlikely to have a meaningful business impact, noting that UltraTech had spent Rs 888 crore of approved Rs 1,800 crore capex. That assessment explains the contrast between the rating and the share-price reaction.

Dhoot Transmission’s Q1 FY27 revenue rose 49.7% year-on-year to Rs 1,446.4 crore and net profit rose 38% to Rs 132.7 crore. EBITDA increased 29% to Rs 218.4 crore, but the margin fell 240 basis points year-on-year to 15.1% because of raw-material costs. No analyst consensus or company guidance was available in the material, so the result cannot be classified as a beat or miss against expectations.

The next session will be shaped by whether crude remains elevated and whether global bond yields extend their rise after the US jobs data. For Indian equities, the key watchpoints are the persistence of domestic institutional buying, the RBI’s handling of surplus liquidity and whether the softer manufacturing PMI begins to affect earnings expectations.

The primary-market calendar remains active. ESDS Software Solution’s strong listing and the planned NSE IPO add to the evidence of sustained issuance demand, while the completed subscription windows for Purple Style Labs, Deepa Jewellers and Rays of Belief keep allocation and listing activity in focus.