Infosys Leads Tech Rally as Sensex Trades Flat Ahead of US Fed Meeting; Oil Plunges Amid Geo-Diplomacy Hopes

Infosys Leads Tech Rally as Sensex Trades Flat Ahead of US Fed Meeting; Oil Plunges Amid Geo-Diplomacy Hopes​

The Indian stock markets, led by the technology sector, saw mixed trading as benchmark indices held steady in anticipation of the upcoming U.S. Federal Reserve meeting. The 30-share Sensex traded at 76,800, while the 50-share Nifty hovered near the 24,000 level. While major banking and infrastructure stocks lagged, technology giants experienced a notable rally, cushioning against global market volatility.

Technology Stocks Lead Gains Despite Global Tech Sell-off​

The domestic rally was largely driven by the IT sector. Stocks like Infosys, Tech Mahindra, HCL Tech, and Eternal managed to gain up to 3%, highlighting India's resilience in the global tech landscape. Conversely, several heavyweights on the Sensex, including Power Grid Corp, NTPC, SBI, HDFC Bank, and Bharti Airtel, registered declines of up to 3.5%. The Nifty Midcap 100 saw a slight rise of 0.2%, although the Smallcap 100 slipped after its previous session's surge.

Fundamental Drivers Boost Market Sentiment​

Analysts point to several positive domestic factors sustaining market optimism despite uneven gains. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the sharp correction in Brent crude oil to $87 provided a significant fundamental and sentiment boost. Furthermore, he highlighted the healthy progress of the monsoon in July, which has reduced the monsoon rainfall deficit to 15.4%.

The Q1 results announced thus far indicate an earnings revival across key sectors, according to Vijayakumar. He also cited strong credit growth, running at approximately 18%, and healthy volume expansion in the automobile sector as additional tailwinds for the market. On the external front, the weakening of the global chip trade was identified as a positive trend for India's economy.

Global Markets brace for Fed Decisions​

International markets showed signs of caution ahead of crucial economic announcements from the U.S. The broader MSCI Asia Pacific Index fell 2.92%, with technology stocks particularly affected. In Asian trading, Kospi tanked over 8% amid increased competition from China and a steep drop in SK Hynix's US-listed shares. Japan’s Nikkei declined 3.86% while Topix slipped 2.77%.

U.S. stock futures edged lower in early Asian trading as investors prepared for a busy week of corporate earnings and the Federal Reserve’s rate decision. S&P 500 futures fell 0.3%, and Nasdaq 100 futures declined 0.2%, though Dow futures managed to gain 24 points, or 0.05%.

Oil Prices Drop Amid Middle East Diplomatic Talks​

Oil prices saw a slight slip of 1% on Tuesday as traders reacted to reports of diplomatic engagement between the U.S. and Iran. The development raised hopes that conflict could ease and energy flows in the Middle East might normalize. Brent crude futures were down $0.78, or 1%, settling at $88 a barrel, while US West Texas Intermediate crude fell $0.88, or 1.1% to $82.

U.S. President Donald Trump had stated on Monday that the U.S. was engaged in productive talks with Iran and that a resolution remained possible, although he also warned that strikes would resume if negotiations failed. Iran has issued reciprocal warnings regarding potential retaliation.

FII/DII Flow and Currency Movement​

Foreign Institutional Investors (FIIs) sold equities valued at just over Rs 822 crore on July 27. In contrast, Domestic Institutional Investors (DIIs) acted as net buyers, investing a provisional total of Rs 2,329 crore into the markets. The Indian rupee strengthened slightly in early trade, opening 0.16% higher at 95.76 against the US dollar, up from its previous close of 95.91.

Technical Outlook and Investment Strategy​

Technical analysis suggests a continuation of the pullback rally as long as Nifty remains above the critical support level of 23,800, with Sensex at 76,300. On the upside, both indices could test their respective 20-day Simple Moving Average (SMA), which stands around 24,100 to 24,150 for Nifty and 77,000 to 77,300 for Sensex.

However, a decisive breach below the 23,800 mark on Nifty or 76,300 on Sensex could trigger fresh selling pressure. In such a scenario, the bearish projection places Nifty towards 23,700 to 23,600, while Sensex could fall to 76,000 to 75,500. Chouhan advises investors to use the current pullback to strategically reduce weak long positions within the 24,100–24,200 zone and suggests selective fresh buying on declines towards the vital support area of 23,800–23,700.