Strong Fundamentals Shielding From Shocks 🛡️

Indian equity markets witnessed a decline owing to the cross border geopolitical concerns. In response to the terrorist attack in ‘Pahalgam’ on April 22nd 2025, Indian Armed Forces conducted a precision strike targeting the terrorist locations in Pakistan occupied Kashmir (POK).

As expected there has been rise in the hostilities between the two countries. No wonder there has been escalation in the military activities. With this the Nifty-50 Index and Sensex each lost around 1.4% each in the past week.

Bank Nifty which recently touched the all time high levels witnessed a significant decline and was down 2.76 percent.

Market Performance

Here's how the major indices fared:

Index	May 2, 2025	May 9, 2025	% Change
Nifty	24,346.7	24,008.0	-1.4
Bank Nifty	55,115.4	53,595.4	-2.8
Midcap Nifty	53,705.1	53,223,4	-0.9

Sector Performance

Indian equities struggled due to geopolitical tensions, with most sectors ending the week lower.

Auto (+1.53%) and media (+1.3%) outperformed, supported by positive news and trade optimism, while midcaps saw slight gains (+0.48%).

Realty (-6.56%) and PSU banks (-4.39%) were the biggest losers, hit by risk aversion amid uncertainty. Other key sectors like banking, pharma, and energy also declined.

Despite global relief on tariff easing hopes, domestic geopolitical risks weighed heavily on Indian markets.

Indices	Weekly Change (%)
Nifty Auto	1.53
Nifty Media	1.30
Nifty Select Midcap	0.48
Nifty IT	-0.03
Nifty FMCG	-1.10
Nifty Metal	-1.15
Nifty Energy	-2.35
Nifty Financial Services	-2.48
Nifty Pharma	-2.57
Nifty Bank	-2.76
Nifty PSU Bank	-4.39
Nifty Realty	-6.56

Weekly Top Gainers (Nifty 500)

Company	Weekly Gain (%)
KPR Mills	26.8
RR Kabel	20.6
CCL Products	20.5
Welspun Living	16.9
Yes Bank	13.1

Weekly Top Losers (Nifty 500)

Company	Weekly Loss (%)
Jindal Saw	-17.1
Sonata Software	-13.1
Bank of Baroda	-11.5
Godrej Properties	-11.1
Indian Hotels Company	-10.2

KPR Mills (+26.8%), RR Kabel (+20.6%), and CCL Products (+20.5%) led the weekly gainers, likely driven by strong earnings and positive sector trends.

In contrast, Jindal Saw (-17.1%) and Sonata Software (-13.1%) topped the losers, possibly due to weaker results or negative news impacting investor sentiment.

Liquidity Conditions

FPIs have remained net buyers in Indian equities in May 2025, investing Rs. 7,858 crore despite mixed earnings and geopolitical concerns. The India-UK free trade agreement and easing US tariffs have supported investor interest.

Indian markets underperformed globally last week as geopolitical risks rose. FPI flows were volatile across emerging markets, with India and several others seeing outflows, except Indonesia.

Going forward, FPI flows are expected to stay volatile, influenced by global risks and domestic factors. RBI’s easing of FPI rules on corporate bonds may boost inflows, but stability remains key.

India Equity - Institutional Funds Flow (in Rs. crore)

Date	FII	FII (Futures)	DII
May 05, 2025	498	3.339	2,789
May 06, 2025	3,795	1,312	-1,398
May 07, 2025	2,586	2,605	2,378
May 08, 2025	2,008	440	-596
May 09, 2025	-3,798	-4,347	7,277
Total	5,089	3,349	10,450

Retail Resilience via Mutual Fund Expansion

April 2025 underscored the remarkable resilience of Indian mutual fund investors, with net AUM rising to Rs. 70 lakh crore from ₹65.74 lakh crore in March and equity mutual funds drawing in Rs. 1,076 crore in fresh inflows.

This marked the 50th consecutive month of positive equity inflows since March 2021, highlighting a fundamental shift in Indian savings behavior toward long-term wealth creation.

SIP contributions reached a record Rs. 26,632 crore - an 8% month-on-month increase-driven by 46 lakh new SIP registrations and a total of 8.38 crore contributing accounts, pushing SIP AUM to Rs. 13.9 lakh crore.

Growth and equity-oriented schemes attracted Rs. 24,269 crore in inflows, while equity mutual funds grew 7.8% overall.

While largecap inflows dipped by 3.6%, investors favoured midcap, smallcap, and sector/thematic funds, reflecting a growing appetite for diversification and higher returns.

This data-driven trend signals a maturing market, where disciplined retail participation is not only weathering global uncertainties but also fuelling the industry’s robust expansion.

Technical Perspective

During the week, the market consistently faced selling pressure at higher levels.

Technically, it has formed a long bearish candle on weekly charts and is also trading near the 200-day SMA (Simple Moving Average) support zone.

We believe that as long as the market remains below the 24,150/79900 level, weak sentiment is likely to continue. On the downside, it could retest the 23,800/78800 level.

Further downward movement may continue, potentially dragging the market to 23,600/78200. On the flip side, a move above 24,150/79900 could signal a pullback rally. Above this level, the market could bounce back up to 24,350–24,450/80500-80800.

For Bank Nifty, the 20-day SMA or 54,000 will act as a trend decider for short-term traders. Below this level, the index could slip to 53,000–52,650. Conversely, a move above 54,000 could push the index up to 54,800–55,000.

The current market texture is uncertain and volatile; hence, levels-based trading would be an ideal strategy for short-term traders.

Strong Fundamentals Shielding From Shocks

Indian equities have historically recovered within a week or less from geopolitical shocks, with minimal long-term impact.

Today’s economy is larger and more resilient, supported by stronger leadership and active diplomacy.

We recommend investors use such periods of mispricing to accumulate quality stocks with solid long-term potential, as earnings and management outlook ultimately drive market direction.cautious

Selective