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Informist, Wednesday, May 27, 2026

 

By Arundathi A R

 

MUMBAI – The domestic benchmark indices are expected to remain rangebound Friday because of the lack of fresh triggers from the West Asia war front. The stalemate on the reopening of the Strait of Hormuz and the wait for a potential peace deal between the US and Iran have left analysts confused about the market's direction. They now see crude oil price levels as the major factor that could alter market sentiment. They also expect earnings in the first half of the financial year 2026–27 (Apr-Mar) to be under pressure. The Indian capital markets will be shut Thursday for Bakri Id.

 

"If the current situation remains for a few more days, inflation is seen at 6–7%," Mangesh Bhadang, assistant vice-president of investments at Avvashya Capital, said. He expects the impact of the recent hikes in retail fuel prices along with supply-chain disruption to be seen in the June and September quarters of FY27.

 

With input costs expected to remain high, manufacturers will continue to face higher costs, even after the reopening of the Strait of Hormuz, Crisil said in its report. "In the domestic market, with demand holding up so far, there is room to pass on the costs to consumers and support margins. Consequently, inflation based on the Consumer Price Index (CPI), particularly core CPI, could witness an upward pressure in the coming months," according to the report.

 

"Overall FY27 numbers would definitely be under pressure if higher crude oil prices will sustain for some more time," Bhadang of Avvashya Capital said. At 1443 IST, the Brent crude oil July futures contract was down over 3% from Tuesday at $96.14 a barrel. Crude oil prices have risen nearly 32% from pre-war levels.

 

"Crude oil prices should first fall to at least $85 a barrel to say the market is normalised," Bhadang said. He expects a correction of 14–15% in crude oil prices if the belligerents in West Asia are able to close a peace deal.

 

Foreign institutional investors were net sellers Tuesday and offloaded shares worth INR 24.08 billion. Domestic investors, however, continued to lend support to the equity market and net bought shares worth INR 13.61 billion. Analysts were divided on market valuations. While some said the valuations are at comfortable levels, Bhadang said the domestic market continues to be overvalued compared to other emerging markets.

 

"While global indices continue to post gains, participation beneath the surface remains limited, suggesting leadership concentration rather than synchronised equity expansion," YES Securities said in an India strategy report about global equity gains. "The more important takeaway, however, is that this narrowness is not necessarily fragile in the near term."

 

"Going forward, we continue to advocate a buy-on-dips strategy near the identified support zone," Osho Krishan, chief manager of technical and derivative research at Angel One, said in a note. "Traders are advised to selectively focus on thematic outperformers, as the broader market trend remains uncertain and lacks clear directional strength in the near term," he said.

 

Wednesday, the Nifty 50 settled almost flat at 23907.15, down 6.55 points. The BSE Sensex ended at 75867.80, down 141.90 points or 0.2%. The Nifty 50 index closed below the 24000 level for the second session after closing above the psychologically crucial level Monday. The rupee settled at 95.6900 a dollar on Wednesday, also flat against 95.6800 a dollar Tuesday.  End

 

US$1 = INR 95.6900

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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