Indian markets rise 1% as IT, private bank stocks drive recovery amid global selloff

Indian stock markets staged a strong recovery on Friday, rising nearly 1% even as global peers tumbled. The Sensex surged 965 points, driven by heavy buying in IT and private banking stocks. The Nifty also climbed over a percent, extending gains from the previous session.

The rally came as a surprise to many, given that markets across Asia and the United States were in the red. Analysts, however, pointed to strong quarterly earnings from Indian companies as the primary reason for the divergence.

What drove the rally

Investors piled into IT and private bank stocks, two sectors that have reported robust Q1 numbers. Infosys, HDFC Bank, and ICICI Bank were among the top contributors to the Sensex's gains. The buying was broad-based, with midcap and smallcap indices also posting solid gains.

“The resilience of Indian markets today can be attributed to strong domestic fundamentals and a positive earnings season so far,” said an analyst who tracks the market closely. “Global headwinds are there, but local cues are overpowering them for now.”

Global selloff fails to dent sentiment

Global markets were under pressure on Friday. Asian indices fell sharply, tracking overnight losses on Wall Street. US futures also pointed to a weak open. The selloff was triggered by fears of slowing economic growth and fresh geopolitical tensions.

But Indian indices largely ignored the external noise. The Nifty remained in positive territory throughout the session, with volatility remaining low. Market participants said the strong Q1 results from blue-chip companies have instilled confidence among domestic investors.

What analysts are saying

According to market observers, the current rally is being driven by domestic institutional investors and retail money. Foreign portfolio investors have been net sellers in recent weeks, but their impact has been offset by local buying.

“The Indian market is currently being supported by strong domestic flows and improving corporate earnings,” an analyst said. “As long as Q1 results continue to surprise on the upside, the market can remain resilient even if global cues are weak.”

Analysts also noted that the banking sector, particularly private banks, has shown healthy credit growth and stable asset quality. IT companies have benefited from strong demand from clients in the US and Europe, despite recession fears.

Some experts, however, warned that the divergence from global markets may not last. “If the global selloff deepens, Indian markets will eventually feel the heat. But for now, the momentum is with the bulls,” an analyst said.

The broader market also saw buying interest. The BSE midcap and smallcap indices rose over 1% each, indicating that the rally was not limited to large-caps.

The rupee remained stable against the US dollar, trading in a narrow range. Bond yields were also steady, suggesting that there was no panic in the broader financial system.

What to watch next

Investors will now focus on the next batch of Q1 earnings, which will be released over the coming week. Global cues, especially from the US Federal Reserve and geopolitical developments, will also be closely monitored. The sustainability of the current rally will depend on whether earnings can keep up with elevated market expectations.