The Sensex closed at a record 96,412 on Tuesday, rising 2.1 percent in its strongest session since the Hormuz corridor opened, as the GST Council's two-slab decision and crude's slide below $90 compounded into the broadest rally of the year. The Nifty settled at 29,285; both indices have now fully recovered the war-quarter drawdown that at its March trough had erased eleven percent.
The rally's breadth was its signature. Consumption names led on the GST arithmetic — the 12-to-8 percent migration covers packaged foods, textiles and budget hospitality, and the street's same-day math put 40 to 90 basis points of gross-margin relief across the staples basket. Autos rose on the 28-to-20 move for small cars, their first effective tax cut since 2018. Oil marketing companies gained on crack-spread normalisation, aviation on the fuel trajectory, and banks — the index's weight — on the growth nowcast and a credit cycle the June data showed reaccelerating.
Foreign flows confirmed the turn. FPIs bought ₹8,400 crore on Tuesday, their largest single-day purchase of the year, taking the seven-week streak past ₹60,000 crore. The buying's composition has shifted decisively toward domestic cyclicals — the war-quarter defensive rotation into IT and pharma has unwound almost exactly.
The caveat lives in the derivatives market. India VIX, at 14.2, sits two points above its pre-war average, and the options skew on far-dated contracts still prices a fat left tail — the market's shorthand for a ceasefire it enjoys but does not trust. War-risk premia in the physical shipping market, four times pre-February levels, are the same sentence written in a different asset class.
The domestic flows behind the market's resilience deserve their monthly mention: SIP inflows crossed ₹31,000 crore in June, a record, and the war quarter — which older market generations would have expected to trigger redemption waves — produced the retail investor's largest net purchases on record. The structural bid has changed what an external shock does to Indian equities: March's eleven percent drawdown against an actual energy blockade compares to eighteen percent for the far smaller 2013 taper episode.
The near calendar holds the tests: the excise review's fiscal signal, the August policy meeting where the rate-cut debate resumes, and earnings season's first read on whether 7.4 percent growth is reaching the profit line.