Market Overview
Indian equity markets continued their upward trajectory, with the Sensex and Nifty posting gains for multiple sessions, driven by robust domestic institutional inflows, strong performances in banking, infrastructure, and real estate sectors, and positive economic indicators such as the World Bank raising India's FY26 growth forecast to 6.5%. However, signs of exhaustion emerged with profit booking ahead of earnings, and mixed global influences—including US shutdown fears, AI bubble concerns, and safe-haven demand for gold—added volatility. Key developments include the Cabinet's approval of ₹24,000-24,634 crore for railway projects, record gold prices nearing $4,000/ounce, and regulatory scrutiny in sectors like real estate and online gaming. Overall sentiment is mixed, balancing domestic growth optimism with global uncertainties.
Key Sectors in Focus
Banking and Financial Services (UP)
Banking stocks led the rally, with HDFC Bank and ICICI Bank gaining prominence, and HDFC Bank's weight in Nifty50 surpassing major IT stocks. Strong DII inflows, loan growth, and RBI lending reforms supported the sector, though margin pressures from potential rate cuts were noted.
Infrastructure and Railways (UP)
Infrastructure stocks surged following the Cabinet's approval of multi-tracking railway projects worth ₹24,000-24,634 crore, enhancing freight capacity and logistics efficiency. Companies like IRCON, RVNL, and JNK India saw gains, supported by government initiatives and domestic growth focus.
Information Technology (MIXED)
The IT sector showed mixed performance, with gains from deals like LTIMindtree's $580 million contract and HCLTech's AI partnerships, but faced headwinds from global challenges, AI bubble fears, and year-to-date declines in stocks like Infosys and TCS. HSBC forecasted modest revenue growth, highlighting deflationary AI impacts.
Real Estate (UP)
Real estate stocks strengthened with institutional investments hitting $4.3 billion, strong office leasing, and corporate expansions like Brigade Enterprises' JDA and Anant Raj's QIP. However, regulatory issues, such as GST notices to Prestige Estates, added caution.
Renewable Energy and Solar (UP)
Renewable energy gained traction with projects from Dilip Buildcon, Adani Green, and Bondada Engineering, supported by government schemes like PM Surya Ghar Yojana. Expansion into solar and clean energy initiatives drove investor interest.
Metals (MIXED)
Metal stocks rallied on extended steel safeguard duties and China's policies, but faced volatility with mixed global demand and commodity oversupply risks. Tata Steel was a key performer, though caution prevailed.
Healthcare (UP)
Healthcare stocks advanced with Biocon's USFDA approval for Rifaximin tablets and CGHS rate hikes boosting hospital revenues. Defensive appeal and sector-specific developments supported gains.
Automotive (UP)
Auto sales surged 18% MoM, driven by GST reforms and festive demand, with luxury segments like Mercedes-Benz India showing strong growth. EV price parity expectations and new launches bolstered sentiment.
EMS (Electronics Manufacturing Services) (UP)
EMS companies like KAYNES, SYRMA, and AVAL reported strong Q2 growth with expanding EBITDA margins, supported by robust order books and high-margin segments.
Chemicals (MIXED)
Specialty chemicals faced modest revenue growth and margin pressures from weak demand, though anti-dumping investigations and divergent Q2 results for firms like Aarti Industries and SRF created varied trends.
Stock Spotlight
| Company | Movement | Insight |
|---|---|---|
| HDFC Bank | Leading rally | HDFC Bank now holds a 13.02% weight in Nifty50, surpassing combined IT stock weights, highlighting a shift in market influence towards financials and its role in driving the rally. |
| LTIMindtree | 3.9% rise to ₹5,270 | Secured a $580 million multi-year deal with a global media firm, its largest ever, boosting digital transformation prospects and investor confidence amid IT sector challenges. |
| Hero MotoCorp | Surged nearly 30% in three months | Stock rose from ₹4,306.75 to ₹5,581.05, reflecting strong momentum in auto sector, though sustainability concerns amid broader market conditions were noted. |
| Titan | Shares closed at ₹3,418, down 0.21%, with YTD gains of 5% | Q2FY26 domestic jewellery sales grew 19% YoY, driven by gold price surges and festive demand, with 34 new stores added, indicating robust growth prospects. |
| SpiceJet | Plunged 48.99% in 2025, closing 2.37% down at ₹28.78 | Shares hit one-year low due to financial health concerns and aviation sector volatility, advising caution for potential recovery. |
| Delhivery | 17% surge over three days | Macquarie projected 17% upside to ₹540, with strong shipment growth and market share gains post-Ecom Express consolidation, supported by analyst 'buy' ratings. |
| IGL | 6% surge to ₹220 | Tax break reducing VAT on Gujarat-sourced gas projected to save ₹360 crore and boost EBITDA by 20%, enhancing margins and investor confidence. |
| Kalyan Jewellers | Stock fell 37.8% this year, trading at ₹484.25 | ICICI Securities upgraded to 'buy' with ₹670 target, citing price correction safety and strong same-store sales growth expected in FY26, driven by festive demand. |
| DMart | Fell 9% in one month | Decline attributed to margin pressures and weak same-store sales, though Motilal Oswal maintained 'Buy' rating on recovery potential from new store additions. |
| Biocon | 0.49% rise to Rs 348.95 | Subsidiary received tentative USFDA approval for Rifaximin Tablets, 550 mg, potentially boosting biopharma portfolio, but execution risks and competition noted. |
Economic Indicators
Inflation
Inflation dropped to 2.6%, with thali prices falling 10% for vegetarian and 6% for non-vegetarian in September YoY, though excess rainfall may push vegetable prices up soon.
Interest Rates
Expectations of RBI and Fed rate cuts supported market sentiment, with Fed cuts priced in for October and December, influencing commodities and currencies.
Gdp
World Bank raised India's 2025-26 growth forecast to 6.5%, driven by strong consumption and GST reforms, though 2026-27 was lowered to 6.3% due to potential US tariff impacts.
Other Relevant Indicators
Services PMI fell to 60.9; rupee slipped to 88.75-88.78 against USD due to strong dollar and foreign outflows; GST cuts benefited sectors like auto and consumer goods; salary hikes forecast at 9% for 2026 may boost spending.
Global Market Influences
Global influences were mixed, with US shutdown fears, AI bubble concerns, and political crises in France and Japan driving safe-haven flows into gold and adding volatility. Positive cues came from record highs in US and Japanese markets on AI and tech rallies, while trade tensions, such as US tariffs and India-EU FTA talks, influenced sentiment. Gold's surge and Fed rate cut expectations were key drivers.
Commodity Trends
Gold (UP)
Gold prices surged to record highs near $4,000/ounce, driven by safe-haven demand from global uncertainties, Fed rate cut expectations, and central bank purchases, with projections up to $4,900.
Oil (UP)
Oil prices rose with Brent near $66, supported by OPEC+ decisions and geopolitical factors, though oversupply risks from US production and demand concerns limited upside.
Silver (UP)
Silver gained alongside gold, with strong investor interest and supply deficits, supported by industrial demand and Fed rate cut hopes.
Copper (UP)
Copper hit 16-month highs due to supply disruptions and Goldman Sachs' raised forecasts, though oversupply risks in metals like aluminium were noted.
Natural Gas (UP)
Prices rose on smaller storage builds and record LNG exports, with buying recommendations amid supply-demand factors.
Expert Opinions
Analysts expressed mixed views, with Citigroup warning of profit-taking risks in Asian stocks due to AI bubbles, while Axis Securities and others recommended stocks with up to 30-50% upside in sectors like banking, infrastructure, and jewellery. Experts advised caution with Nifty resistance at 25,100-25,500 and support at 25,000-24,950, suggesting buying dips and selling rallies. Goldman Sachs raised commodity forecasts, and JM Financial highlighted growth in marquee stocks, emphasizing monitoring earnings, regulatory changes, and global policies.
Market Outlook
Short-Term Projection
The short-term outlook is cautiously optimistic, with Nifty likely to test resistance levels of 25,200-25,500, supported by domestic inflows, sectoral strengths in banking, infrastructure, and real estate, and economic growth. However, volatility may persist due to profit booking, global uncertainties, and regulatory issues, with corrections possible if key supports are breached. Focus on earnings, IPO performances, and commodity trends is advised.