In a week marked by sharp volatility, thirty-five stocks from the Nifty 500 index managed to secure double-digit gains, showcasing remarkable resilience amid challenging market conditions. Key performers included Hindustan Copper, Vodafone Idea, Multi Commodity Exchange (MCX), and Jindal Stainless, which defied broader headwinds to end the week on a high note.
Market Context: Volatility Amid Mixed Signals
The Indian equity market experienced significant turbulence, driven by a confluence of domestic and global factors. Heightened geopolitical tensions, particularly warnings of potential military strikes on Iran, coupled with mixed December-quarter earnings, created an environment of uncertainty. Additionally, persistent selling by foreign portfolio investors (FPIs) exerted downward pressure, with NSDL data revealing an outflow of ₹36,000 crore in January alone, following a record withdrawal of ₹1.66 lakh crore in 2025.
Despite these challenges, the Nifty 50 index demonstrated a nuanced performance. It closed Friday's session 0.39% lower at 25,320, yet managed to eke out a weekly gain of 1.10%, buoyed by stock-specific action ahead of the Union Budget 2026. However, the broader picture for January remained bleak, with the index falling 3.10%, or 809 points, marking its weakest January performance in over a decade. The last comparable decline occurred in 2016, when the index plummeted nearly 5%.
Global and Domestic Headwinds
Weak global cues further dampened risk appetite. Notably, US President Donald Trump's threats to impose additional tariffs on the European Union, South Korea, India, and Canada added to investor anxiety. On the domestic front, December-quarter results presented a mixed bag, with many companies grappling with elevated labour costs that impacted their bottom lines. The sharp rise in crude oil prices also weighed heavily on market sentiment.
Sectoral Highlights: Defence and Capital Goods Shine
Amid the volatility, defence and capital goods stocks emerged as clear winners, riding a wave of optimism fueled by expectations of substantial capital expenditure allocations in the upcoming Union Budget 2026. This sector-specific rally underscores the market's anticipatory behavior regarding government policy directions.
Top Performers and Their Returns
Hindustan Copper led the charge with an impressive 28% weekly surge, despite facing heavy selling pressure on Friday, where it fell 10% after hitting the 20% upper circuit the previous day. Defence stocks were particularly standout performers. Garden Reach Shipbuilders and Data Patterns (India) bucked the broader market trend, rallying up to 24% as expectations of a significant capex boost for the defence sector lifted investor sentiment.
Other defence-related entities such as Mazagon Dock Shipbuilders, Shipping Corporation, and Cochin Shipyard also posted robust gains, each climbing over 11%. Similarly, capital goods stocks captured investor attention, with market participants betting on a potential 10–15% increase in government capital expenditure. This optimism propelled stocks like GE Vernova T&D India, ABB India, Siemens Energy India, Syrma SGS Technology, HBL Engineering, Hitachi Energy India, Schneider Electric, Apar Industries, Triveni Engineering, and Aegis Vopak Terminals, which saw gains ranging from 13% to 19%.
Vodafone Idea was another notable gainer, surging 12.5% to ₹11.2 per share, with the bulk of its advance occurring during Friday's trading session. The list of double-digit gainers extended to include Oil India, Karur Vysya Bank, ACME Solar Holdings, V-Guard Industries, HFCL, Aegis Logistics, GMDC, ZF Commercial Vehicles, Adani Green Energy, Star Health and Allied Insurance Company, Gillette India, Adani Energy Solutions, Zen Technologies, and Shyam Metalics and Energy, all of which closed the week with gains between 10% and 17%.
Analyst Outlook: Volatility to Persist
Market analysts anticipate that volatility will remain a defining feature in the near term. Ajit Mishra, Senior Vice President of Research at Religare Broking, highlighted that the upcoming week is packed with critical domestic triggers. The Union Budget 2026–27, scheduled for February 1, remains the primary focus, with investors keenly watching for fiscal discipline, capital expenditure priorities, and growth-oriented policy measures.
Mishra further noted that the Reserve Bank of India's monetary policy decision on February 6 will be closely monitored, especially following cumulative rate cuts of 125 basis points since the beginning of the year. High-frequency indicators, including the HSBC Manufacturing PMI Final, Services PMI Final, and Composite PMI Final, are expected to provide additional insights into economic momentum. A busy earnings calendar across various sectors is likely to contribute to stock-specific volatility.
Vinod Nair, Head of Research at Geojit Investments Limited, echoed similar sentiments, stating that markets are poised to remain largely event-driven, with the Union Budget acting as the key domestic catalyst. He observed that expectations are evenly balanced between growth support and fiscal prudence. Nair suggested that cyclical sectors may continue to exhibit relative resilience if bolstered by policy measures, while IT and other export-oriented stocks are likely to stay sensitive to global macroeconomic cues.
"Overall, markets are expected to stay range-bound, underpinned by strong domestic fundamentals but constrained by external uncertainties, including geopolitical risks, global tariff developments, and the evolving policy outlook of the U.S. Federal Reserve," Nair concluded.
Disclaimer: The views and recommendations presented above are those of individual analysts or broking companies and do not reflect the stance of Mint. Investors are advised to consult with certified experts before making any investment decisions.
