Chinese firms crash India’s power party as Nifty hits three-day high

Markets extended their winning run to a third consecutive day on Friday, but a policy shift rattled the country’s power equipment stocks. The government allowed four Chinese manufacturers to bid on critical domestic power projects, bypassing the security clearance norms in place since 2020. Shares of GVT&D, Power India, and CG Power fell sharply, unwinding gains built on India’s infrastructure boom story.

“...the competition just got real,” noted Sarvam Goel, Founder of Pocketful, adding that while the two-year exemption is limited in scope, one of the key pillars of the domestic power sector’s re-rating, the exclusion of Chinese competition, has developed a crack.

Against that backdrop, the Nifty 50 closed at 24,270.85, up 95.15 points or 0.39 per cent, while the BSE Sensex rose 261.79 points or 0.34 per cent to 77,763.91. The index opened with a gap-up above 24,200 but gave back intraday highs in the second half as profit booking trimmed gains. India VIX fell 3.7 per cent, signalling easing volatility.

IT sector was the showstopper. HCL Technologies surged 5.74 per cent after winning a $1.14 billion AI-led transformation contract with a Fortune Global 50 company, a deal that shifted the narrative for a sector that had been under pressure. The Nifty IT index rebounded nearly 2 per cent, extending its two-day gain to over 6 per cent. Realty, healthcare, and pharma also outperformed. On the other hand, PSU banks remained under pressure. Union Bank of India shed over 7 per cent after reporting slower-than-expected loan growth in its June quarter business update, compounded by an ex-dividend trading day. SBI fell 1.01 per cent and Axis Bank dropped 1.51 per cent.

Broader markets were mixed. The Nifty Midcap 100 declined 0.19 per cent, while the Nifty Smallcap 100 edged up 0.04 per cent. For the week, the Nifty gained 0.89 per cent and the Sensex added 663 points, with the Realty index the standout performer, up 7.20 per cent, while the Energy index lost 1.40 per cent.

The macro backdrop was supportive. Weaker-than-expected US jobs data reinforced expectations that the Federal Reserve will hold interest rates steady at its next meeting, with rate futures pricing in just an 18 per cent probability of a hike, down from roughly a third earlier in the week. Crude oil hovered near $69 per barrel on Friday, close to pre-Middle East conflict levels, as shipping through the Strait of Hormuz continued to recover amid progress in US-Iran negotiations, a relief for India’s import bill. The rupee traded around 95.39 against the dollar, firming alongside regional peers on the back of the softer US labour market data, with near-term resistance seen at 95.80 and support at 94.95. TRADING ECONOMICSInvesting.com India

Looking ahead, markets are expected to maintain a gradual upward bias, but the focus will quickly shift to stock-specific action as the June-quarter earnings season kicks off. Investors will also keep a close eye on the southwest monsoon. June rainfall came in 40 per cent below the Long Period Average, and while the IMD forecasts July at 94 per cent of normal, it has revised its full-season outlook down to 90 per cent due to El Niño conditions. The Defence Acquisition Council meeting, where procurement proposals worth over ₹1 lakh crore are expected to be tabled, could also keep defence stocks in play next week. “...buy on dips” remains the recommended strategy, say analysts, with 24,150 as the immediate support level and 24,500–24,700 as the next resistance zone for the bulls.

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