What’s Driving Investor Sentiment in the Indian Stock Market.

As we enter the second half of 2025, the Indian equity markets are showing resilience despite global uncertainties and domestic regulatory actions. From fresh all-time highs to intensified regulatory scrutiny, multiple factors are influencing investor behavior this month. Here’s a detailed look at what’s shaping market sentiment right now.

1. SEBI Cracks Down on Jane Street: A Major Regulatory Shake-Up
    
   One of the biggest developments shaking up Dalal Street is SEBI’s expanded investigation into Jane Street, a U.S.-based quantitative trading firm. The regulator has accused the firm of manipulating indices like Bank Nifty, a serious charge that has sent shockwaves through the brokerage and trading ecosystem.
    
   This move has already triggered a significant decline in broker-related stocks:
   •BSE Index and Angel One: Dropped around 6%
   •Central Depository Services (India) Ltd (CDSL): Fell by ~3.5%
   •Nuvama Wealth (Jane Street’s local partner): Slumped nearly 9%
    
   While the crackdown has rattled parts of the market, it may ultimately improve transparency and reduce short-term volatility in the derivatives segment. Long-term investors may view this as a positive move for market integrity.
    
2. Sensex & Nifty on an Upward Trajectory
    
   Despite global headwinds, the benchmark indices continue to show strength:
   •Sensex has rallied over 6,000 points in H1 2025, registering a solid 8% gain
   •Currently, it is just ~2,000 points away from its all-time high
    
   Interestingly, the rally is no longer limited to large-cap stocks. Small-cap stocks are beginning to outperform, indicating a potential shift in market leadership. With improved earnings visibility and broad-based economic recovery, this trend could continue into the second half of the year.
    

3. Upcoming Catalysts to Watch

   📌 India–U.S. Trade Deal (Deadline: July 9)

   Markets are eagerly awaiting updates on the proposed India–U.S. trade agreement, expected to be finalized or updated by July 9. The outcome of this deal could have wide-ranging implications for multiple sectors, including manufacturing, defense, and technology.

   📌 Q1 FY26 Earnings Season

   With the first-quarter earnings season around the corner, analysts and investors are keenly watching corporate performance. Strong earnings growth, particularly in banking, IT, and manufacturing sectors, could further boost market momentum.