Market Overview
Indian markets exhibit a mixed to bearish sentiment, with the Nifty 50 falling 2.65% last week and testing critical support levels around 24,400–24,600, driven by FII outflows of ₹19,570 crore, US tariff hikes, H-1B visa fee increases, and a weakening rupee. However, optimism stems from strong domestic inflows of ₹334 billion in August, GST reforms boosting consumption, and medium-term earnings growth projections of 11.7% for FY26E and 16.4% for FY27E. High volatility is reflected in the India VIX rising to 11.43, with technical indicators signaling bearish pressure but potential for rebounds if supports hold. Key themes include sector rotation, global uncertainties, and resilience in infrastructure and manufacturing sectors.
Key Sectors in Focus
Banking (DOWN)
Banks face pressure from NIM compression and FII outflows, with private banks like HDFC Bank and ICICI Bank hit hard. PSU banks show resilience with record profits of INR 1.5 trillion in FY25, outpacing private banks in loan growth at 12%, and a projected 14% earnings CAGR for FY26-28E due to improved asset quality and stable RoA.
Information Technology (DOWN)
IT stocks like TCS and Infosys suffer significant losses, with TCS losing ₹97,598 crore in market cap, driven by US protectionist policies including H-1B visa fee hikes and tariffs, weak earnings guidance, and structural challenges from AI disruption and slowing revenue growth. Analysts advise caution, though long-term offshoring may benefit.
Automotive (UP)
The auto sector is buoyed by festive demand, GST cuts to 18% for small cars and 40% for large ones, and new model launches like Maruti's Victoris SUV. Companies like Maruti, Mahindra, and Tata Motors show strong sales and profit growth, with ICRA forecasting moderate growth for FY2026 and technical breakouts in stocks like Ashok Leyland.
Manufacturing and Defence (UP)
This sector shows resilience and growth, driven by government initiatives like the PLI scheme, infrastructure spending, and defense orders such as HAL's ₹62,400 crore aircraft contract. Companies like BEL and Cochin Shipyard benefit from strong order books, with manufacturing supported by rising demand in power tools and cables.
Renewable Energy (UP)
India's renewable sector is expanding with 250 GW of non-fossil fuel capacity, a ₹19,744 crore green hydrogen initiative, and policies supporting solar and ethanol. Companies like Waaree Energies are expanding capacities, positioning the sector for long-term growth amid global energy shifts.
Pharmaceuticals (MIXED)
The pharma sector shows mixed signals, with companies like Sun Pharma and Gland Pharma experiencing growth from specialty drugs and capacity expansions, but facing risks from US tariffs and profit declines in firms like Glenmark. Analysts remain cautious but optimistic on select stocks.
Commodities and Materials (UP)
Commodities like gold, silver, copper, and aluminum are rallying due to safe-haven demand, industrial needs, and supply constraints, though bulk chemicals face declines from oversupply. This trend supports sectors like cables and wires, with potential for volatility.
Stock Spotlight
| Company | Movement | Insight |
|---|---|---|
| Tata Motors | 1.3% rise to ₹672.9 | Shares rose after UK government guaranteed a £1.5 billion loan for Jaguar Land Rover, aiding recovery from a cyberattack. Strong Navratri sales with 10,000 deliveries and 25,000 inquiries add to positive sentiment, though full JLR resumption timeline is uncertain. |
| HDFC Bank | Insufficient data | Shows resilience amid market downturn, with potential to spark a Nifty rebound. A key stock to watch in banking despite broader declines from FII outflows and NIM pressures. |
| TCS | Lost ₹97,598 crore in market cap | Faced heavy losses, hitting 52-week lows due to H-1B visa fee hikes and US tariff impacts, underscoring IT sector vulnerability to global policy changes. |
| Ashok Leyland | Targets Rs 150-157 | Highlighted in expert picks for potential rebound with bullish breakouts and strong volumes, supported by auto sector growth and technical indicators. |
| Hindustan Aeronautics Ltd (HAL) | Not specified, but analysts maintain 'BUY' rating with target price of ₹5,800 | Secured a ₹62,400 crore order for 97 LCA Mk1A aircraft, driving a projected 24% revenue CAGR through FY28, with strong margins and normalized engine supplies. |
| Larsen & Toubro (L&T) | Not specified, but Motilal Oswal reiterates BUY with target price of ₹4,300 | Stands out for strong execution from a ₹6.1T order book, with forecasts of 18% EBITDA and 21% PAT CAGRs over FY25-28, supported by diversification into defense and green hydrogen. |
| Maruti Suzuki | Target price of ₹18,050 by JM Financial | Launched Victoris SUV with 5-star safety rating, benefiting from GST cuts and competitive positioning. JM Financial raised volume and margin estimates, issuing a 'Buy' rating. |
Economic Indicators
Inflation
Low at 2.4% average with Crisil's full-year forecast of 3.2%, supporting potential rate cuts; GST reforms may lower CPI by 25-50 bps.
Interest Rates
RBI repo rate held at 5.5% since June, with low probability of October cut due to strong growth; potential cuts in December if trends shift. SBI Research advocates for a 25 bps cut, citing low inflation.
Gdp
India's Q1 FY26 growth hit a five-quarter high, supported by consumption, though lower tax collections may curb capital expenditure.
Other Relevant Indicators
Household financial assets surged 14.5% YoY in 2024; trade deficit narrowed to $26.5bn in August 2025; FII outflows of ₹19,570 crore last week; rupee hit 88.87; weekly power demand up 6% YoY; IIP and PMI data are key focuses.
Global Market Influences
Global volatility significantly impacts Indian markets, with US-India trade tensions including 50% tariffs and H-1B visa fee hikes driving declines. OPEC+ output hikes cause oil price falls, while US job growth slumps with Fed eyeing rate cuts. Events like UN sanctions on Iran, UK support for JLR, and China's industrial profits surge add to uncertainties, with key markets including US, China, UK, and Iran influencing flows and sentiment.
Commodity Trends
Gold (UP)
Hit record high of ₹1,15,139 per 10 grams, up 3.77% weekly, driven by Fed rate cut expectations, festive demand, central bank buying, and safe-haven appeal amid global uncertainties.
Silver (UP)
Surged 9.28% to ₹1,41,889 per kg, with a 50% rise in rupees this year, supported by industrial demand, safe-haven factors, and similar drivers as gold, though higher volatility in downturns.
Oil (DOWN)
Fell 1% due to OPEC+ considering supply hikes, with Brent under $70 and WTI near $65, adding to global economic concerns and potential impacts on energy stocks and inflation.
Copper (UP)
Gained on mine disruptions and strong industrial demand from infrastructure, EVs, and data centers, boosting revenues in cables and wires sectors.
Expert Opinions
Experts warn of potential 5-6% market correction due to global volatility but project medium-term growth driven by strong earnings. Analysts advise caution with light positions and buying on dips near supports, while technical indicators suggest mean reversion potential. Emkay Global maintains a Nifty target of 28,000 with portfolio adjustments favoring auto and neutral IT; SBI Securities warns of declines to 24,000 if Nifty breaks 200-day EMA; and firms like JM Financial and Motilal Oswal are bullish on auto, pharma, and infrastructure stocks, but cautious on IT due to AI disruption and tariffs.
Market Outlook
Short-Term Projection
The short-term outlook is volatile and bearish, with Nifty testing key support levels at 24,400–24,600; a break could lead to further declines. Rebound potential exists if supports hold, driven by RBI policy decisions, festive demand, and sector-specific strengths in auto, defense, and renewables. Investors should monitor global cues, US-India trade talks, inflation data, and IPO activities for direction.