Indian Shares Rise Further As Domestic Investors Support Market Recovery

Indian equity benchmarks advanced on May 25, extending the rebound seen over the past few sessions as lower crude oil prices and improving global sentiment encouraged buying in equities.

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The Nifty moved closer to the 24,000 level during the session, while broader market indices remained firm. The midcap and smallcap stocks gained interest among buyers following their significant corrections in the past months.

Domestic institutions continued to play a role in the market amidst erratic foreign investors' actions. Flows through systematic investment plans and other long-term investment channels remained steady even during periods of volatility.

Broader Markets Witness Fresh Buying

Several midcap stocks and smallcap stocks recovered after heavy declines recorded earlier this year. Market sentiment had weakened during March and April because of foreign investor selling, concerns around high valuations and uncertainty linked to crude oil prices.

The recent moderation in crude oil prices has brought some relief to investors. India imports a significant portion of its crude oil requirement, making energy prices an important factor for domestic markets.

Broader market indices outperformed benchmark indices during the session as investors returned to sectors that had seen steep corrections over the previous quarter.

Domestic Flows Continue To Provide Stability

Strong domestic participation remained one of the key factors supporting Indian equities. Mutual fund flows by means of SIPs took place despite the volatility in the markets. The domestic institutions have also remained aggressive buyers during the period of correction to offset the foreign selling activity.

As opposed to earlier instances of weakness, the domestic flow has stayed largely steady during the recent period of volatility.

Select Sectors Maintain Business Momentum

Corporate earnings remained mixed across sectors, although several industries continued to report stable operational performance.

Companies in industrials, capital goods, power and telecom sectors maintained healthy order books and project activity during the latest earnings season. The steady business environment in these segments supported overall market sentiment.

Investors also tracked developments in overseas markets as expectations around possible interest rate cuts by major central banks improved global risk appetite.

At the same time, foreign portfolio flows remained selective because Indian equities continue to trade at a premium compared with several other emerging markets.

Market participants are expected to remain focused on crude oil prices, global economic developments and company earnings trends as trading activity continues in the coming sessions.