Indian equity markets delivered a confident performance in the first trading week of 2026, ending January 2 at record closing levels after weeks of consolidation. A mix of improving earnings expectations, optimism around the upcoming Union Budget, and sector-specific tailwinds helped indices move higher, while broader markets also showed steady participation.
After trading in a narrow range through most of December, investors appeared more willing to take positions, encouraged by early signals of resilient domestic demand and stable macroeconomic conditions.
One of the key factors supporting the rally was anticipation around December quarter (Q3FY26) earnings. Market participants expect corporate results to reflect steady consumption trends, improving margins in select sectors, and continued credit growth.
At the same time, expectations that the Union Budget may include measures to support growth, infrastructure spending, and manufacturing added to the positive undertone. Together, these factors helped lift sentiment across both frontline and broader indices.
Sector-wise, the auto space stood out, supported by encouraging December sales data that pointed to sustained demand across passenger and commercial segments. PSU banks also remained in focus as improving asset quality and expectations of faster credit expansion attracted buying interest.
The utilities segment gained traction on hopes of rising power demand and increased industrial activity. In contrast, FMCG stocks faced pressure, largely due to selling in ITC, which weighed on the otherwise stable defensive pack.
Broader markets outperformed benchmark indices during the week, with midcap stocks showing stronger momentum than large caps. Smallcaps also posted gains, though at a more measured pace.
Meanwhile, precious metals witnessed sharp profit booking. Gold futures fell nearly five percent during the week, while silver declined around 1.5 percent, reflecting shifting risk appetite and positioning after recent gains.
Weekly Market Performance Snapshot
By the close of the week, the Nifty 50 had gained 286 points, rising 1.1 percent to end at 26,329. The BSE Sensex advanced 721 points, or 0.85 percent, to settle at 85,762.
Among broader indices, the Nifty Midcap 100 climbed 1.74 percent, while the Nifty Smallcap 100 added 0.77 percent, underlining improving participation beyond frontline stocks.
What to Watch in the Coming Week
Looking ahead to the week beginning January 5, markets are expected to trade in a range with a positive bias. Investors will closely track provisional quarterly business updates and early earnings-related commentary.
Global cues may introduce some near-term volatility, particularly around geopolitical developments involving the US and Venezuela. Additionally, key global data points such as US payroll numbers, unemployment figures, services PMI, and inflation data from China could influence market direction. Movements in crude oil and precious metals prices will also remain on the radar.
While near-term fluctuations cannot be ruled out, the broader market tone remains constructive. Strong domestic fundamentals, improving sectoral trends, and expectations of policy support continue to provide a stable base for equities as the new year unfolds.
