The Indian stock market kicked off the new year with robust gains, decisively breaking out of a five-week consolidation phase. Strong, broad-based buying across sectors propelled benchmark indices to fresh highs on Friday, January 2, setting an optimistic tone for the start of the third quarter earnings season.
Record-Breaking Rally on Dalal Street
The benchmark Sensex surged by 573 points, or 0.67%, to close at 85,762.01. The Nifty 50 scaled an intraday all-time high of 26,340 before settling at a record closing level of 26,328.55, gaining 182 points or 0.70%. The rally was not confined to large-caps; the BSE Midcap index gained 0.97%, and the Smallcap index rose 0.79%, indicating widespread participation.
Ajit Mishra, SVP of Research at Religare Broking Ltd., noted that Indian equities began 2026 on a strong note, gaining around 1% for the week. "While the start of the week was slightly subdued amid mixed cues, a sharp rebound in the final sessions enabled benchmark indices to close near the week’s highs," he said, attributing the move to renewed risk appetite and confidence in the domestic growth outlook.
Market Triggers and Outlook for the Coming Week
Market experts believe the upward momentum is likely to persist. Ponmudi R, CEO of Enrich Money, stated that Indian equities are expected to retain an upward bias, underpinned by strong domestic fundamentals, steady domestic institutional inflows, and expectations of healthy corporate earnings growth.
"Looking ahead, market focus is set to shift toward the Q3 earnings season, with traders likely to build positions selectively ahead of results from key index heavyweights," Ponmudi added. Beyond earnings, high-frequency indicators tracking industrial activity and the upcoming S&P Global Services and Composite PMI data will be closely watched to gauge the durability of the economic recovery.
Key domestic data points for investors next week include:
- Final readings of the HSBC Services and Composite PMI.
- FY GDP growth data.
- Bank loan growth, deposit growth, and foreign exchange reserves data.
Globally, US non-farm payrolls and unemployment data will be critical in shaping Federal Reserve rate expectations. Furthermore, reports of US military strikes on Venezuela have introduced a fresh geopolitical element that markets will monitor for implications on global risk sentiment and commodities.
Technical View and Sectoral Performance
Nifty 50: Ajit Mishra highlighted that the Nifty has decisively moved above the 26,200 zone, confirming the end of consolidation. Immediate support is around 26,000, with a stronger base at 25,700. A sustained move above 26,300 could pave the way for a rise toward 26,500–26,700, and potentially 27,000.
Bank Nifty: The banking index posted its first-ever close above lifetime highs at 60,150.95. Ponmudi noted that holding above the 59,800–60,000 zone keeps the outlook positive, with upside potential toward 60,500–61,000. A dip below 59,500 could trigger short-term consolidation, but the primary trend remains upward.
Sensex: The index consolidated just below its all-time highs. It continues to attract buying interest in the 85,200–85,500 support band. A convincing breakout above 86,000 could accelerate momentum toward 86,500–87,500.
In other markets, the Indian rupee weakened past the 90 level, ending at 90.20 against the US dollar. Meanwhile, precious metals rallied sharply, with MCX Gold settling around ₹1,36,900 and Silver futures advancing to around ₹236,316 per kg, supported by industrial demand and tight supply.
"While short-term volatility around global data releases cannot be ruled out, the underlying market structure remains firmly positive, encouraging a selectively optimistic approach as 2026 unfolds," concluded Ponmudi of Enrich Money.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
