Indian stocks rebound on heavy institutional buying amid geopolitical volatility
Benchmark indices reclaimed key support levels to close out a volatile week as foreign and domestic investors injected billions of rupees, offsetting midweek sell-offs triggered by rising Middle East tensions and crude oil prices.
Indian benchmark indices finished the week with a strong rally, with the Sensex closing at 77,569 and the Nifty 50 reclaiming 24,207. This late-week surge followed a volatile period where markets successfully defended critical support levels despite midweek shocks.
The recovery was primarily fueled by robust institutional participation. Foreign institutional investors injected ₹2,603.72 crore on Friday, marking their largest single-day inflow of the week, while domestic institutional investors added ₹2,019.68 crore. For the week, foreign funds were net buyers of ₹4,669.88 crore and domestic funds contributed ₹8,275.62 crore.
This resilience comes after a sharp sell-off on July 8 that saw both indices tumble over 2%. The decline was triggered by renewed US-Iran tensions following the breakdown of a peace deal, which pushed Brent crude above $78 a barrel and spiked the India VIX.
Analysts note that the market's ability to hold the 24,000 level demonstrates structural resilience against recurring geopolitical uncertainties. With broad index bets proving difficult in a fragmented environment, traders are being advised to adopt a stock-specific approach.
The information technology sector is drawing attention due to low valuations and an improving domestic artificial intelligence landscape. Meanwhile, stabilizing banking heavyweights are showing signs of lifting, which could provide the necessary momentum for the Bank Nifty to join the broader recovery.
Amid this environment, NeoTrader co-founder Raja Venkatraman has identified three specific equities for potential upside over the next two months. Venkatraman recommends Sumitomo Chemical India, currently trading at ₹513.70, with a buy trigger above ₹515 and a target of ₹560.
The agrochemicals firm has seen steady upside recently, aided by news of a stake sale in its Saudi business, though it carries a high price-to-earnings ratio of 47.20. He also suggests buying General Insurance Corporation of India above ₹370 for a ₹403 target.
The state-owned reinsurer, which trades at a P/E of 7.63, appears to be recovering from a recent downward trajectory despite vulnerabilities to natural catastrophes. Additionally, e-commerce platform Meesho is recommended for purchase above ₹195, targeting ₹214.
The zero-commission platform trades at a P/E of just 3.28, and technical indicators suggest a recovery in the retail consumer space. However, investors are cautioned about the company's heavy reliance on cash-on-delivery orders, which inflates logistics costs.
