Dalal Street logs longest winning streak in 7 months as crude relief fuels rally

Indian equity benchmarks extended their winning streak to a third consecutive week, marking their longest weekly advance in seven months, as easing geopolitical tensions, softer crude oil prices and supportive policy measures helped improve investor sentiment despite lingering concerns over monsoon progress and first-quarter earnings.

The NSE Nifty 50 ended the holiday-shortened week up 0.2% at 24,056, while the BSE Sensex gained 0.4% to close at 77,100.47. The gains came after markets rallied sharply earlier in the week following a ceasefire between Iran and Israel, which sent Brent crude prices tumbling back to around $72 a barrel and eased fears over global energy supplies.

Unlike the sharp rebound witnessed in April after six weeks of losses, analysts said the current rally is being driven by improving macroeconomic fundamentals rather than technical recovery alone.

Macro tailwinds strengthen market sentiment

According to Mayank Jain, market analyst at Share.Market by PhonePe, the biggest catalyst has been the sharp improvement in the global macro environment.

"The most significant boost has come from a massive cool-down in global geopolitical tensions. The US-Iran understanding and the reopening of the Strait of Hormuz have pulled Brent crude below the critical $80-a-barrel mark, easing inflationary pressure on India and improving corporate profit margins," Jain said.

He added that positive developments surrounding the proposed India-US economic cooperation roadmap and India's expanding trade agreements have reinforced confidence among global investors that the country's growth remains resilient despite external uncertainties.

Jain noted that while the Nifty has now climbed above its 20-day and 50-day simple moving averages, indicating improving short-term momentum, the index continues to trade below its 200-day moving average, suggesting that the broader long-term uptrend is yet to be fully restored.

Policy support, improving flows aid recovery

The market recovery has also coincided with a notable improvement in domestic liquidity conditions and foreign investor sentiment.

Nevil Dedia, managing director and head of institutional equities at Equirus Securities, said Brent crude has corrected nearly 18% over the past month as geopolitical tensions eased, while the Reserve Bank of India's recent FCNR(B) measures are expected to attract $30-50 billion in NRI inflows.

"The rupee has appreciated around 2.5% against the US dollar, while the 10-year government bond yield has softened by nearly 25 basis points to about 6.7%, reflecting improving liquidity and easing rate expectations," Dedia said.

Foreign institutional investor (FII) selling has also moderated. From net outflows of nearly ₹27,000 crore during the first week of June, overseas investors have turned net buyers over the past two weeks, he noted.

Exchange data pointed toward improving sentiment. On Thursday, foreign investors purchased equities worth a net ₹383.76 crore, while domestic institutional investors (DIIs) remained strong buyers with net purchases of ₹5,747.75 crore, stressing continued domestic support for the market.

Banks lead, but rally remains selective

Despite the benchmarks extending their winning streak, analysts cautioned that the rally is far from broad-based.

According to SBI Securities' weekly market report, the Nifty gained 0.2% during the week, while the Nifty Midcap index declined 0.8% and the Smallcap index slipped 0.2%, indicating that gains remained concentrated in a handful of sectors rather than across the broader market. Realty, auto, healthcare and banking stocks outperformed, whereas metal and capital goods shares witnessed selling pressure.

"The gains in the indices have been predominantly led by banking and NBFC stocks. The rally is still not broad-based, and investors will need to remain watchful for Q1FY27 earnings," Dedia said.

Vishal Goraddia, fund manager at Aikyam India Discovery Fund, described the three-week rally as a constructive signal but warned that several macro risks remain unresolved.

"Brent easing to around $72.7 a barrel has reduced a key external risk for India. At the same time, the RBI's foreign currency deposit measures and the government's removal of bond taxes for foreign investors have strengthened the environment for capital inflows," he said.

However, Goraddia cautioned that markets have already priced in much of the benefit from lower crude prices.

"The bigger uncertainty now is the monsoon. June rainfall remains significantly below normal, while the impact of El Niño is yet to fully play out. If rainfall disappoints further, rural incomes could come under pressure, affecting one of India's key growth engines. It is a careful tread ahead," he said.

With crude prices stabilising and geopolitical risks easing, analysts believe the market's attention will now shift to domestic fundamentals.

According to analysts, investors will closely track monthly auto sales, GST collections, manufacturing and services PMI data, core sector output and the first set of June-quarter business updates next week for fresh cues on corporate earnings and economic activity.

While the benchmarks have now recorded their longest weekly winning streak in seven months, experts believe sustaining the rally will require broader participation beyond financial stocks and continued support from earnings growth, favourable monsoon developments and stable global markets.