Despite market volatility driven by geopolitical tensions and global uncertainty, strong economic growth continues to support India’s fiscal and economic outlook.
Our Bureau
New Delhi / Mumbai
Indian stock markets ended lower on Thursday as investors reacted to escalating geopolitical tensions in West Asia, rising crude oil prices, weak global cues and continued selling pressure in information technology stocks. Yet even as benchmark indices struggled, a new report by S&P Global Ratings underscored the resilience of the broader Indian economy, highlighting strong growth prospects that are helping cushion fiscal pressures across the country’s states.
The contrast between short-term market sentiment and longer-term economic fundamentals was evident throughout the trading session.
The BSE Sensex settled 150.63 points, or 0.20 per cent lower, at 73,832.55, while the NSE Nifty declined 53.35 points, or 0.23 per cent, to close at 23,161.60. Markets witnessed heightened volatility during the day, opening sharply lower before staging a partial recovery and then slipping back into negative territory by the close.
Investor sentiment was hit by renewed concerns surrounding the US-Iran conflict, which pushed crude oil prices higher and weakened risk appetite globally. During early trading, the Sensex fell 464.43 points, while the Nifty dropped 142.9 points. Both indices later recovered and briefly turned positive before selling pressure resurfaced.
Commenting on the market action, Ajit Mishra, SVP-Research at Religare Broking Limited, said, “Markets remained volatile on the weekly expiry day and ended lower amid weak global cues. After a subdued start, the Nifty witnessed a swift rebound in the first half; however, the recovery completely fizzled out as the session progressed.”
According to Mishra, investor sentiment remained fragile due to renewed escalation in West Asia and concerns over elevated global interest rates following stronger-than-expected US inflation data. He also pointed to persistent foreign institutional investor outflows and a weaker rupee as factors weighing on market sentiment.
Technology stocks emerged as the biggest drag on the market. The Nifty IT index fell more than one per cent, while FMCG, PSU Bank, Realty, Consumer Durables and Chemicals indices also closed in negative territory. Major technology companies came under pressure amid concerns over global demand trends.
Despite the weak finish, analysts noted signs of resilience in the domestic market.
Market analyst Vipin Dixena said, “Indian benchmark indices staged a dramatic turnaround, ending flat-to-positive after recovering from sharp early-morning losses. Both Sensex and Nifty now display a bullish inverted hammer candlestick pattern on daily charts, signaling buyer resilience.”
According to Dixena, fresh US-Iran geopolitical tensions triggered the initial sell-off as surging crude oil prices rattled investors. However, aggressive buying in banking stocks helped support the recovery, even though profit-booking near key resistance levels eventually capped gains.
The resilience displayed by banking and pharmaceutical stocks reflected a broader theme highlighted in a separate report released by S&P Global Ratings. While markets remain vulnerable to external shocks, India’s underlying economic growth continues to provide a strong foundation.
In its report, titled Indian States: Strong Growth Softens The Blow Of Fiscal Imbalances, S&P Global Ratings said robust economic expansion is helping prevent the finances of Indian states from deteriorating despite persistent fiscal deficits and rising debt levels.
The agency noted that state governments continue to face significant spending pressures as welfare programmes and infrastructure investments remain elevated. Revenue-expenditure mismatches and fiscal deficits are also expected to persist over the next few years.
“These spending requirements will continue to weigh on the weak budgetary settings of states. That said, we expect credit risks to be manageable, on the back of robust economic expansion which in turn sustains fiscal revenue growth,” S&P Global Ratings said.
The report emphasised the increasingly important role of state governments in India’s development trajectory.
“States are responsible for roughly two thirds of total public expenditure, yet local infrastructure needs continue to be large,” the report said.
According to S&P, the key factor supporting state finances is India’s strong growth outlook. The ratings agency expects India’s real GDP growth to average 6.9 per cent between fiscal 2027 and fiscal 2029, making it one of the fastest-growing major economies in the world.
The agency also expects debt levels across most states to stabilise over the coming years.
“Over the next few years, we expect the debt levels for most states to stabilize, with growth in operating revenues central to this stabilization,” the report said.
S&P further highlighted the role of the Reserve Bank of India and India’s deep domestic capital markets in ensuring reliable access to funding and liquidity for state governments.
Taken together, the developments present a picture of an economy navigating short-term volatility while retaining strong medium-term fundamentals. Stock markets remain sensitive to geopolitical risks, global inflation concerns and fluctuations in crude oil prices. Yet India’s growth trajectory continues to provide a buffer against these pressures.
