Indian Market Outlook - Friday, January 2 2026

On Friday, January 2 2026, Indian equities posted broad‑based gains and closed at fresh record levels. The benchmark Nifty 50 index ended above the 26,300 mark for the first time, while the BSE Sensex climbed past 85,700. Persistent domestic institutional buying, upbeat corporate news and optimism around domestic growth kept sentiment positive even as foreign investors continued to sell.

Indices and key statistics

Index/indicator	Closing value	Change	% change	Notes
Nifty 50	26,328.55	▲ 182 pts	+0.70 %	First close above 26,300; touched an intraday high of ~26,340.
BSE Sensex	85,762.01	▲ 573 pts	+0.67 %	Also near its record high; broad‑based buying in large‑caps.
Nifty Bank	≈ 60,150.95	▲ ≈ 440 pts	+0.74 %	Hit an all‑time high (~60,203); banking stocks rallied.
Nifty IT	≈ 38,170	▲ ≈ 150 pts	+0.39 %	IT majors such as Infosys, Wipro and TCS gained.
Foreign Institutional Investors (FII)	– ₹3,269 cr (Jan 1)	—	—	FIIs remained net sellers, but their selling was partly offset by domestic buying.
Domestic Institutional Investors (DII)	+ ₹1,526 cr (Jan 1)	—	—	DIIs continued to support the market.
USD/INR	≈ ₹89.92	▼ 0.06	–0.06 %	Rupee appreciated slightly as RBI defended the ₹90 level.

Notes: Sector indices approximate as reported intraday; closing values were not published for all sectors.

Top sectoral performers

Sector index	Direction	Highlights
Banking & financials (Nifty Bank)	Strong	Hit new high on renewed buying in public‑sector banks (Yes Bank, Union Bank, SBI, Bank of Baroda, PNB, IndusInd). Better December loan growth and expectations of margin resilience supported the sector.
IT services (Nifty IT)	Positive	Index gained ~0.4 %. Major IT stocks (Infosys, Wipro, TCS, HCL Tech, Tech Mahindra) advanced after analysts signalled improving demand, easing currency headwinds and prospects of order wins.
Metals & mining (Nifty Metal)	Positive	Hindalco Industries and Coal India rose as investors bet on higher metal prices, an improved demand outlook, and government initiatives.
Auto	Positive	Gains in Maruti Suzuki, Mahindra & Mahindra and Bajaj Auto after December passenger vehicle sales increased ~25.8 % y‑o‑y, indicating robust domestic demand.
Power & utilities	Positive	NTPC and Power Grid rallied on project announcements and expectations of rising electricity demand.
Public‑sector enterprises (CPSE/PSU)	Positive	Coal India, NTPC and Bharat Electronics drew interest as investors rotated into state‑owned names on policy tailwinds.
FMCG	Negative	The index fell ~1.4 % as ITC declined almost 4 % amid broker downgrades and concerns over the government’s January 1 increase in cigarette excise duties.

Top gainers and losers (Nifty 50)

Top gainers	Price change	% change	Drivers
Coal India	▲ ₹27.45	+6.85 %	Company allowed direct participation of foreign buyers from Bangladesh, Bhutan and Nepal in its e‑auction platform, improving growth prospects; stock hit a 52‑week high.
NTPC	▲ ₹15.80	+4.7 %	Reports of non‑disclosure agreements with Russia’s Rosatom and France’s EDF to explore large nuclear reactor projects lifted sentiment; investors anticipate new revenue streams in nuclear power.
Hindalco Industries	▲ ₹30.75	+3.44 %	Benefited from firm global metal prices and optimism after subsidiary Novelis signalled faster restoration of its fire‑hit U.S. plant; metal stocks saw broad buying.
Trent	▲ ₹112.20	+2.61 %	Continued momentum after robust holiday‑season sales; retail sector expected to benefit from cuts in GST on consumer durables.
Bajaj Finance / Power Grid	▲ ₹17.90 / 4.20	+1.8 % / +1.6 %	Bajaj Finance gained on positive credit‑growth outlook; Power Grid advanced on stable earnings visibility.

Top losers	Price change	% change	Drivers
ITC	▼ ₹13.80	–3.79 %	Continued slide after the government raised excise duties on cigarettes; brokers downgraded earnings estimates.
Nestlé India	▼ ₹15.30	–1.18 %	Profit taking after recent run‑up; some analysts cautioned about valuation risk.
Kotak Mahindra Bank	▼ ₹22.70	–1.02 %	Investors booked profits amid lack of immediate triggers; speculation about leadership changes persists.
Shriram Finance	▼ ₹9.35	–0.92 %	Minor pull‑back after hitting an all‑time high a day earlier; underlying trend remains positive due to robust loan growth.
Bajaj Auto (outside Nifty 50)	▼ —	–up to 4 %	Slipped on profit booking despite strong December sales data.

What moved the market

Robust domestic cues: A 25.8 % year‑on‑year jump in December passenger‑vehicle sales signalled healthy consumer demand, boosting automobile and ancillary stocks. News of the government considering GST and interest‑rate cuts for consumer durables also added to optimism.
Corporate catalysts:
- Coal India allowed foreign buyers to participate directly in its single‑window e‑auctions for the first time, driving the stock almost 7 % higher.
- NTPC rose after reports that it signed NDAs with Rosatom (Russia) and EDF (France) to explore building large nuclear reactors in India, suggesting diversification into nuclear power.
- Reliance Industries (RIL) gained ~1.1 % as several brokerages raised their target price citing improved earnings visibility from its telecom and new‑energy businesses.
- Vodafone Idea surged in the broader market after the company amended an agreement with the Vodafone Group, paving the way for an equity infusion of about ₹5,840 crore and signalling progress on fundraising.
- Auto names like Mahindra & Mahindra, Maruti Suzuki and Ashok Leyland rallied following strong monthly sales updates and expectations of a recovery in rural demand.
Sector rotation: Investors rotated into public‑sector enterprises, power, metal and banking stocks on hopes of policy support and improved earnings, while trimming positions in defensive FMCG names.
FII‑DII flows: Despite FIIs being net sellers on January 1 (–₹3,269 cr), strong DII inflows (+₹1,526 cr) and retail participation kept markets buoyant.
Macro environment: India’s macro‑economic backdrop remains supportive with resilient GDP growth and benign inflation. The rupee held firm, boosting confidence in global investors.

Global cues

Thin global trading: Many Asian markets (Japan, China) remained closed for the New Year holidays, resulting in low volumes. However, MSCI Asia‑Pacific ex‑Japan index edged up ~0.7 % and Hong Kong’s Hang Seng gained about 1.2 %.
US & European futures: U.S. equity futures traded higher (S&P 500 up ~0.3 %, Nasdaq 100 up ~0.36 %) while European futures were mixed. Investors awaited the first batch of U.S. economic data for 2026, including jobs reports and Federal Reserve minutes.
Commodity markets: Gold continued its strong momentum, rising ~0.9 % to around $4,351.70/oz, while silver jumped about 2 % to $72.63/oz. Crude oil prices edged higher, with Brent around $60.99 a barrel amid concerns over Russian and Venezuelan exports. Higher metal prices supported Indian metal stocks.
Macro uncertainties: Investors globally are preparing for potential leadership changes at the U.S. Federal Reserve, the impact of the U.S. presidential election year and possible volatility around U.S.–China trade relations.

Stocks to watch

Stock	Rationale
Coal India (CIL)	Permitting direct foreign participation in e‑auctions should boost volumes and margins. The stock hit a record high; momentum may continue if volumes remain strong.
NTPC	Signing NDAs with Rosatom and EDF signals potential foray into nuclear power. Watch for further announcements on project agreements.
Reliance Industries (RIL)	Analyst upgrades and improving telecom/retail earnings provide upside; continued interest in new‑energy initiatives could support valuations.
Hindalco Industries	Benefited from rising metal prices and Novelis’ plant restart; sustained strength in aluminium and copper may fuel further gains.
Trent	Strong sales and consumer‑durable demand; favourable GST cuts could support earnings momentum.
ITC	Remains under pressure after excise duty hike on cigarettes; any clarification from management or stabilisation in volumes will be key for recovery.
Mahindra & Mahindra / Maruti Suzuki / Ashok Leyland	Strong December sales indicate healthy demand; monitor further monthly volumes and rural sentiment.
Vodafone Idea	Amended promoter agreement sets stage for fundraising; watch for progress on capital infusion and tariff hikes.
Shriram Finance	After recent surge, watch for consolidation; underlying fundamentals remain strong as NBFC credit demand stays firm.

Corporate updates

Coal India: Effective January 1, CIL has allowed buyers in Bangladesh, Bhutan and Nepal to directly bid in its single‑window auctions. The move opens a new export channel and could boost e‑auction premiums. The stock jumped over 6 % on January 2.
NTPC: The company signed non‑disclosure agreements with Russia’s Rosatom and France’s EDF to explore cooperation on deploying large pressurised‑water reactors in India. Investors see this as a step toward diversifying into nuclear energy.
Reliance Industries: Multiple brokerages raised price targets citing improving telecom profits, likely tariff hikes and momentum in the new‑energy business. RIL shares gained about 1.1 %.
Mahindra & Mahindra / Maruti Suzuki / Bajaj Auto: December passenger‑vehicle sales grew about 25.8 % year‑on‑year, boosting auto stocks. Bajaj Auto, however, faced profit‑taking after hitting record highs.
ITC: The finance ministry increased excise duties on cigarettes by ₹2,050–₹8,500 per thousand sticks, effective February 1. Broker downgrades followed, dragging ITC shares down nearly 4 % and weighing on the FMCG index.
Vodafone Idea: The company amended its 2017 agreement with Vodafone Group, paving the way for a capital injection of ₹58.4 billion. The stock rose sharply on hopes of better liquidity.
MSTC: Shares of MSTC (an e‑commerce and auction platform) rose ~4 % as it benefits from Coal India’s expanded e‑auction framework.

Technical levels and outlook for Monday, January 5 2026

Nifty 50: The index has strong support near 26,200–26,250. Below that, 26,100 is the next support. Immediate resistance is near 26,400; a break above may open the door toward 26,500–26,600. Momentum indicators (RSI) remain in overbought territory, suggesting potential consolidation or minor profit taking.
Bank Nifty: Support lies around 59,800–60,000. Resistance is at 60,300–60,500. The index has hit successive new highs; traders should watch for follow‑through buying in PSU banks.
Market tone: The underlying tone remains constructively bullish as domestic liquidity continues to counter foreign selling. However, after hitting fresh records, markets may consolidate or trade range‑bound ahead of major global events, including U.S. jobs data and the Federal Reserve’s meeting minutes. Earnings season kicks off soon, so stock‑specific actions and updates will guide sentiment. Investors should maintain a positive bias but remain selective, focusing on sectors with earnings visibility (banks, power, metals, autos) while being cautious on overstretched FMCG names.

What to watch on Monday (Jan 5 2026)

Global events: U.S. non‑farm payrolls and minutes of the December Federal Reserve meeting are due late Friday; their impact could be felt in Monday’s trade. Investors will also track crude‑oil price movements and geopolitics (Middle East tensions).
Corporate actions: Watch for December quarter business updates from banks and NBFCs, which may guide the market. PSU banks could remain in focus after strong buying last week.
Macro data: Any domestic data on services PMI or GDP revisions could influence sentiment.

Summary: Indian markets celebrated the first week of 2026 with record highs. The rally was broad‑based, with banks, metals, power and auto stocks leading, while FMCG names lagged. Positive domestic macro data and corporate news offset persistent FII selling. Heading into the next trading day, sentiment remains positive but a period of consolidation is possible as traders await global economic cues.