Dalal Street extended its rally on Friday despite rising geopolitical tensions. The Sensex and Nifty rally was led by IT stocks after Tata Consultancy Services (TCS) reported better-than-expected June quarter earnings, while easing concerns over crude oil prices despite fresh US-Iran tensions also improved sentiment.
Around 10 am, the BSE Sensex was trading 800.61 points, or 1.04%, higher at 77,542.43, while the NSE Nifty50 gained 247.80 points, or 1.03%, to 24,210.60.
IT STOCKS LEAD THE RECOVERY
The biggest support came from IT stocks after TCS kicked off the June-quarter earnings season with numbers that beat Street expectations. The Nifty IT index jumped over 3%, making it the best-performing sector in early trade.
Among the top gainers, Tech Mahindra surged 3.64%, TCS climbed 3.48%, HCLTech gained 3.43% and Infosys rose 3.42%. L&T Technology Services, Coforge and other IT shares also traded sharply higher.
TCS reported a 5% year-on-year rise in consolidated net profit to Rs 13,349 crore for the June quarter, while revenue increased nearly 14% to Rs 72,275 crore. The company’s board also announced an interim dividend of Rs 12 per share.
The company also reported a strong order book of $9.5 billion during the quarter, including several AI-led deals. Annualised AI revenue run rate rose to $2.6 billion, reflecting growing demand for artificial intelligence-led transformation projects.
Investor confidence also received a boost after TCS added 9,279 employees during the quarter, its highest quarterly hiring in more than a year, signalling confidence in future demand despite global uncertainty.
CEO K Krithivasan also struck an optimistic tone, saying he expects technology spending by manufacturing and life sciences clients to improve in the September quarter. He added that TCS does not see AI causing a major contraction in business and believes new AI opportunities will offset any disruption.
CRUDE PRICES OFFER RELIEF DESPITE MIDDLE EAST TENSIONS
Another reason behind Friday’s rebound was that crude oil prices remained well below the levels that investors feared despite the renewed military escalation between the US and Iran.
Brent crude was trading around $76.52 a barrel, while WTI crude stood at $72.29. Although geopolitical tensions remain elevated, oil prices have not surged beyond the psychologically important $80-$100 range that could significantly hurt India’s economy.
A sharp spike in crude generally raises India’s import bill, fuels inflation and puts pressure on corporate earnings. The absence of such a spike helped investors look beyond geopolitical worries.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said markets appear to be ignoring the latest developments in West Asia as crude prices have cooled despite fresh tensions.
“Tensions in West Asia continue without any clarity of a resolution to the geopolitical crisis. However, interestingly, markets are largely ignoring these negative developments. Brent crude declined 3% in a day and global stock markets have completely ignored the renewed tensions. This confident message from the market is significant. But investors have to be cautious,” he said.
He added that from a domestic perspective, there are no major headwinds for the economy and markets are likely to respond positively to favourable corporate earnings.
BROAD-BASED BUYING RETURNS
The rally was not limited to IT stocks. Fifteen of the 16 sectoral indices traded in the green.
Nifty Financial Services rose 0.94%, Nifty Private Bank gained 0.90%, Nifty PSU Bank climbed 0.87%, while Auto, FMCG, Media and Realty indices also advanced. Broader markets joined the rally, with the Nifty Midcap 100 rising 0.80% and the Nifty Smallcap 100 gaining 0.84%. India VIX, the market’s fear gauge, declined over 5%, indicating easing volatility.
Among Sensex stocks, besides the IT pack, ICICI Bank, Axis Bank, HDFC Bank, Reliance Industries, Mahindra & Mahindra, Tata Steel and Adani Ports also traded higher.
While Friday’s rebound suggests investors are willing to buy quality stocks after Thursday’s sharp correction, markets are likely to remain sensitive to two key factors — developments in the US-Iran conflict and the June-quarter earnings season.
TCS has set a positive tone for the IT sector, but upcoming results from other large companies will determine whether the broader market recovery can sustain in the coming weeks.
