The Nifty 50 concluded the first half of the financial year 2026-27 with a nominal gain of 1.3 percent. The index finished at 22,620.45 on 30 September. Pankaj said, "If US yields continue to rise, then somewhere down the line, there will be pressure on Indian yields as well."
Market benchmark Nifty 50 concluded the first half of the financial year 2026-27 (H1FY27) with a nominal gain of 1.3%. The index finished at 22,620.45, down 0.42%, on Wednesday, 30 September.
Such has been the Nifty’s performance over the last two years that even the meagre 1% gain over the past six months appears decent. For context, the benchmark index is down 12% over the last two years. On 30 September 2024, the index was at 25,810.85.
While the index hit an all-time high of 26,373.20 on 5 January this year, it succumbed to pressure from higher oil prices amid the US-Iran conflict.
What moved the market in H1FY27?
While over the last two years, the market was struggling due to earnings growth-valuation mismatch and heavy foreign capital outflow, the troubles for it compounded after the US and Israel attacked Iran in February this year.
Contrary to the expectations that the conflict will end soon, it continues even today. The chaos in West Asia drives oil prices higher, posing a serious macroeconomic challenge for the world's third-largest oil importer, India.
While the domestic economy has so far remained resilient, with Q1FY27 GDP growth at 7.8%, the risk of inflation has strengthened globally, triggering monetary tightening by the US Federal Reserve, the Bank of Japan, and the European Central Bank. The Reserve Bank of India (RBI) is also expected to raise rates by 25 basis points on 7 October.
A fresh headwind has emerged- bond yields are rising globally. The 30-year Treasury yield in the US jumped to 5.62%, which is its highest intraday level since June 2002. Yields on the 10-year Treasury hit the level of 5.29%, its 19-year high.
Top gainers and losers
Seven stocks - ONGC, Infosys, NTPC, TCS, Power Grid, HDFC Life, and Reliance Industries - declined more than 10% in the first half of the year, while 16 stocks jumped more than 10% during the period.
Will H2FY27 be positive for the Indian stock market?
While experts anticipate market recovery in the second half of the year, a lot will depend on oil prices and the movement of bond yields.
"If US yields continue to rise, then somewhere down the line, there will be pressure on Indian yields as well. That will have implications across the economy because the RBI could be forced to hike rates, and the entire interest-rate-sensitive segment could get impacted," said Pankaj Pandey, the head of research at ICICI Securities.
"After a disappointing H1FY27 marked by earnings downgrades, subdued corporate commentary and heightened global uncertainty, the outlook for H2FY27 appears incrementally more constructive. The case for equities is not built on margin expansion, but on the prospect of earnings stabilisation and a gradual recovery in growth expectations," said Devender Singhal, Senior Fund Manager, Kotak Mutual Fund.
Uttam Kumar Srimal, Deputy Head - Fundamental Research at Axis Direct, believes market conditions could improve in the second half of the fiscal year if three critical variables align:
1. Easing geopolitical tensions and stabilisation in global oil prices.
2. A plateau or decline in global bond yields and rupee stabilisation.
3. A sustainable corporate profitability and revenue growth.
"H2FY27 is projected to be more earnings-driven than liquidity-driven. Strong domestic retail and institutional inflows continue to cushion market drawdowns, while lower government borrowing planned for the second half should support bond-market conditions," said Srimal.
He, however, added that given persistent geopolitical uncertainties and elevated energy prices, broad-market momentum may remain capped.