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Informist, Monday, May 18, 2026

 

By Arundathi A R

 

MUMBAI – The domestic equity market is expected to maintain a positive bias in the near term after the indices ended Monday's session flat after having opened deep in the red. However, the fresh warning issued by US President Donald Trump to Iran and the subsequent rise in price of crude oil will continue to cloud sentiment. The March quarter corporate results will also be in the spotlight.

 

"Nifty (50) witnessed a strong pullback after a gap down opening as index continues to consolidate amid stock specific action," Bajaj Broking Research said in a note. "Going ahead, index holding above Monday's low (23317) will keep the pullback intact and retesting of the breakdown area of 23800-23900 is likely in the coming sessions." Monday, the Nifty 50 settled at 23649.95, up 6.45 points. The BSE Sensex ended at 75315.04, up 77.05 points or 0.1%.

 

"FIIs (foreign institutional investors) will decisively return to India only when three conditions align: attractive relative valuations, stable global macro conditions, and confidence in India's earnings cycle," Manoranjan Sharma, chief economist at Infomerics Ratings, said.

 

At 1630 IST, the Brent crude oil July futures contract was up almost 1% at $110.32 a barrel. Asked about the sustainability of absorbing global crude oil price shocks, Sharma replied that India's consumer protection strategy against global crude price spikes has a finite lifespan. "Prolonged under-recoveries carry an additional risk--they deter private investment in fuel retail and distort long-term energy pricing signals," he said.

 

"The broader trend for the rupee remains weak, with markets closely watching India's strategic efforts to secure lower-cost oil and gas supplies to ease pressure on the import bill and forex reserves," Jateen Trivedi, research analyst, commodity and currency, at LKP Securities, said in a note. "Continued FII selling and global risk aversion are also adding to volatility in the currency market." The Indian rupee settled at 96.3450 a dollar Monday, 0.4% lower than the previous close. It settled at a record closing low for the sixth session running as the price of crude oil continued to be above $110 a barrel.

 

Systematix Institutional Equities expects the country's CPI projections to soon align with the 6-7% range for the second half of the financial year 2026-27 (Apr-Mar), with WPI inflation rising. "The mix of slowing growth, widening BoP (balance of payments) stress, and sticky inflation will complicate the RBI's (Reserve Bank of India's) job, likely forcing a sharper rupee breach beyond INR 100 and a reversal of last year's monetary accommodation," the brokerage said in its India economy and strategy report. The brokerage sees rate-sensitive sectors such as banking, financial services, and insurance and real estate as well as capital-intensive sectors facing pressure from increasing rates and weaker currency.

 

Systematix considers the external sector to add more fragility. "The spike in crude oil imports, feared to rise by $100 billion if prices sustain at $100 per barrel, could push the trade deficit toward 10% of GDP," it said in the report.

 

ICICI Securities said foreign portfolio investments in India are becoming broad-based, driven by growth opportunities. The brokerage observed that the stocks held by foreign portfolio investors in 2022, which contributed around 41% to their portfolio in India, plunged sharply to 21% currently.

 

FIIs halted their prolonged selling activity Thursday and remained buyers Friday as well, while domestic institutional investors reversed their buying spree Friday. Foreign investors turned net buyers for the second session Friday, buying shares worth INR 13.29 billion. Domestic investors net sold shares worth INR 19.59 billion in the session.

 

Global credit rating agency Moody's Ratings expects India's earnings growth to slow down over the next 12–18 months. "Rising input costs, supply-chain disruptions, and currency depreciation will dampen demand across consumer and industrial sectors and defer capital spending," Moody's said in a report. The artificial intelligence-linked labour market risks will obstruct income growth and further pressure consumption. On the back of stronger balance sheets and internal cash sources, corporate credit quality is expected to remain stable.

 

Corporations are expected to defer capital spending and delay execution of existing plans. "...capital spending growth is likely to moderate to around 4% over the next two years, from the 11% compound annual growth rate recorded between fiscal 2022 (fiscal year ended Mar. 31, 2022) and fiscal 2026," according to the report.

 

On the earnings front, Bharat Electronics will detail its March quarter earnings Tuesday. The company is likely to report a moderate year-on-year rise in its top line and almost flat growth in the bottom line. Its net profit is expected to be INR 21.06 billion, flat on year but up 31% on quarter. The net sales are expected to be INR 98.31 billion, up nearly 8% on year and 38% on quarter.  End

 

US$1 = INR 96.34

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

 

Edited by Rajeev Pai

 

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