Indian equity benchmarks wrapped up the week ending 31 October with a firm recovery of nearly 2 per cent, buoyed by renewed buying from foreign institutional investors (FIIs), softening bond yields, and a supportive domestic earnings season. The rally signals a meaningful shift in near-term market sentiment after weeks of pressure from global macro headwinds.

Weekly and Daily Performance

The Nifty50 advanced 2 per cent over the week, adding 0.51 per cent on the final trading day to close at 23,053. The BSE Sensex ended the week at 74,459, up 308 points or 0.42 per cent on Friday, and gained 1.83 per cent across the five sessions. Broad market indices outperformed benchmarks, with the Nifty Midcap100 rising 2.69 per cent and the Nifty Smallcap100 surging 4 per cent — a sign that improving macro conditions encouraged wider participation beyond large-caps.

What Drove the Rally

According to market analysts, softer crude oil prices and easing bond yields were the primary catalysts that revived risk appetite among investors. The US Federal Reserve, the European Central Bank (ECB), and the Bank of Japan (BoJ) all held rates unchanged as widely expected, though their continued caution on inflation kept expectations of early monetary easing in check. Pharma and healthcare stocks led sectoral gains on the back of strong earnings results, while real estate benefited from the softer yield environment. Metals, FMCG, and autos drew support from expectations of easing input costs. Cement and oil and gas were the week's key laggards.

FII and DII Flows

FIIs net purchased shares worth ₹6,304.67 crore during the week, reversing a recent trend of outflows that had weighed on benchmarks. Domestic institutional investors (DIIs) complemented this with net buying of ₹3,109.79 crore, providing additional depth to the recovery. The combined institutional participation reinforced confidence in the near-term outlook, analysts said.

Key Risks and Caution Flags

The mood turned cautious heading into the weekend as renewed tensions in West Asia pushed crude prices higher, triggering profit-booking in the broader market. Brent crude ended the week near $117 a barrel, and the upcoming OPEC+ review will be closely watched for any signals of a supply response. Analysts also flagged elevated energy costs and tighter financial conditions as risks to sustained business activity momentum. Domestically, manufacturing and services PMI readings will be critical gauges in the coming sessions.

Levels to Watch

Immediate resistance for the Nifty is placed in the 23,175–23,285 range, with support seen at 22,750–22,800. For Bank Nifty, a close above 55,150 is needed to reinforce the bullish outlook, while 53,780 remains its crucial support level, according to analysts. Looking ahead, investors will track US PMI, jobs data, and US midterm election outcomes, alongside domestic PMI prints and Q2 earnings season results, as the key drivers of global and stock-specific moves.