Market Overview
Indian equity markets ended with mixed sentiment, characterized by volatility driven by weak global cues from US-China trade tensions and a US government shutdown, which fueled risk-off sentiment. Key indices like the Sensex and Nifty closed lower, ending a brief rally, but showed resilience by recovering from early lows, supported by financial stocks and strong FII inflows of ₹2,743.33 crore in equities. Sector performance was bifurcated, with declines in IT, FMCG, and automotive due to company-specific events and profit-taking, while financial services, renewable energy, and infrastructure sectors gained on strong inflows and deal flows. Technical analysis indicates Nifty support at 25,000, with potential for a rally to 25,400 if resistance levels are breached. The outlook remains cautious, with Q2 earnings, global geopolitical risks, and domestic policy developments expected to drive near-term movements.
Key Sectors in Focus
Financial Services (UP)
The sector demonstrated strength, limiting market losses with gains in stocks like Bajaj Finance, Adani Ports, and Motilal Oswal Financial Services, which surged nearly 4% after an ICRA credit rating upgrade. Banking indices like Bank Nifty held above key support levels, supported by selective buying, regulatory easing, and robust FII inflows into equities and debt segments. Life insurers and banks, such as HDFC Life and Kotak Mahindra Bank, showed positive momentum, with targets for credit growth and fee income expansion.
Information Technology (DOWN)
IT stocks dragged the market lower, with Infosys and Wipro among top losers, as mixed Q2 earnings and global trade tensions hurt sentiment. However, HCLTech provided a positive note by raising its FY26 services revenue growth guidance by 100 bps to 4.0-5.0% in constant currency, with Q2 net profit up 10.2%, reflecting management optimism amid AI demand and digital services growth. The broader sector faced profit-taking and cautious investor behavior due to geopolitical risks and industry slowdown warnings from experts like Raamdeo Agrawal.
Renewable Energy (UP)
This sector exhibited robust growth, driven by companies like Waaree Renewable Technologies, which reported a 117-118% profit surge in Q2 FY26 and holds a strong order book of 3.48 GWp. Adani Green Energy targeted 50 GW capacity by 2030 with bullish analyst forecasts, while government initiatives, such as Gujarat's green projects and Rajasthan's record-low battery storage prices, fueled investor interest. Expansions into energy storage and AI-driven solutions further supported momentum.
Automotive (DOWN)
The sector faced headwinds, with Tata Motors falling 2% due to its upcoming demerger of the CV business, set to trade ex-CV from October 14, and sales declines in JLR adding to volatility. Eicher Motors declined amid restructuring involving EV teams, though it has surged over 41% year-to-date, reflecting market focus on EV growth. Bajaj Auto provided some support with gains on strong sales, but overall, the sector was weighed down by company-specific events and global uncertainties.
Infrastructure and Real Estate (UP)
Infrastructure firms showed positive momentum, with KEC International securing new transmission and distribution orders worth ₹1,174 crore, boosting its year-to-date order intake to around ₹14,000 crore, and targets suggesting 20% upside. Real estate surged, particularly in Delhi-NCR, with residential prices up 19% YoY in Q3 2025, driven by stable economics and luxury demand, though Signature Global reported a 28% drop in pre-sales, indicating some volatility. Government initiatives like PM Gati Shakti and reduced logistics costs supported growth.
Healthcare (STABLE)
The healthcare sector attracted attention with Fortis Healthcare and Yatharth Hospitals seeing investments from top Indian investors, supported by a 9.78% budget increase to ₹99,858 crore. Fortis reported 11% CAGR sales growth to ₹7,783 crore in FY25, while Yatharth's sales surged 29% CAGR to ₹442 crore, though both trade at high P/E ratios. Rainbow Children's Medicare and MedPlus showed positive momentum, benefiting from India's growing healthcare infrastructure.
Commodities and Metals (MIXED)
Steel and metals sectors faced pressure with a 6% QoQ profit drop in Q2 FY26 due to falling steel prices, affecting companies like JSW Steel and Tata Steel, though Morgan Stanley's 'Overweight' rating on JSW Steel indicated investor confidence. Aluminum and copper prices declined due to tariff threats and supply issues, while gold and silver hit record highs on safe-haven demand, driven by US-China trade tensions and Fed rate cut expectations.
Stock Spotlight
| Company | Movement | Insight |
|---|---|---|
| Tata Motors | Fell 2% to ₹664 | Notable due to its upcoming demerger of the CV business, with shares trading ex-CV from October 14 and the demerged entity's listing expected in 4-6 weeks. The stock's decline reflects investor caution ahead of the record date, and the removal of the CV business from indices adds to near-term volatility, making it a key watch for restructuring impacts amid sales declines in JLR. |
| HCLTech | Q2 net profit rose 10.2% to ₹4,235 crore | Raised its FY26 services revenue growth guidance by 100 bps, reflecting management's optimism and strong execution, with revenue up 5.2% in Q2 and EBIT margin guidance of 17.0-18.0%. This update is crucial for the IT sector, potentially propelling investor confidence amid global demand trends and serving as a bellwether for industry performance, supported by AI revenue exceeding $100 million. |
| Waaree Renewable Technologies | Surged up to 14% to ₹1,264.00 | The stock jumped after reporting a consolidated net profit surge of over 2-fold to ₹116.30 crore in Q2 FY26, with total income up 47.61%, reflecting strong growth in the renewable energy sector. A robust order book of 3.48 GWp and expansion into Battery Energy Storage Systems make it a key player for investors, highlighting sector tailwinds. |
| Adani Ports | 15% up in 2025 | Investec initiated coverage with a 'Buy' rating and a ₹1,715 price target, implying 22% upside, driven by competitive advantages from its 17 ports and logistics network. Expected 15% revenue CAGR from FY25-30 and strong cash flows position it for growth, supported by India's infrastructure push and deal activity in financial services. |
| BLS International | Plunged 17-18% to a 52-week low | The stock crashed after the MEA barred it from new tenders for two years, sparking investor panic despite clarifications that ongoing contracts remain unaffected. This highlights regulatory risks in government contracting and its impact on future revenue growth, with Indian Missions contributing 12% to revenue. |
| MCX | Surged 60% in six months | The rally is fueled by strong bullion-led growth, with HDFC Securities projecting bullion's share of total premium to rise to 40% by Q4 FY27E, reducing concentration risk from crude and natural gas contracts. This diversification supports sustained performance, making it a key stock for commodities exposure and risk management strategies amid record gold and silver trading volumes. |
Economic Indicators
Inflation
Domestic CPI inflation eased to 1.54% in September 2025, the lowest since June 2017, driven by falling food prices and cheaper fuels, with RBI cutting its FY26 forecast to 2.6%. This provides relief and potential room for interest rate cuts to spur economic growth, though core inflation remains stable at 4.2%.
Interest Rates
Expectations of US Fed rate cuts were a key driver, with money markets pricing in a 25 bps cut, influencing global sentiment and safe-haven flows into gold. Domestically, benign inflation offers scope for potential rate cuts, but no specific changes were announced.
Gdp
India's Q1 2025-26 GDP growth of 7.8% exceeds the 6.5% potential rate, with the World Bank upgrading FY26 growth to 6.5%, reflecting strong domestic demand and sound policies. However, it lags the post-COVID average, requiring higher private investment and improved efficiency for sustained growth.
Other Relevant Indicators
FIIs were net buyers in Indian equities (₹2,743.33 crore), debt (₹805.09 crore), and hybrid segments (₹1.05 crore), indicating strong foreign capital inflows and confidence. Forex reserves fell by $276 million to $699.96 billion, and the rupee weakened to 88.78 against the USD due to equity declines and rising crude oil prices. UPI transactions grew at a 49% CAGR to 54.9 billion in Q1 FY26, highlighting robust digital payment adoption.
Global Market Influences
Global factors heavily influenced Indian markets, with US-China trade tensions, including Trump's threats of 100% tariffs, leading to risk-off sentiment, sharp declines in Asian markets, and defensive shifts. However, improved global cues, such as rebounds in US futures and hopes for diplomatic talks, provided some stability. Geopolitical risks from events in the Middle East, Europe, and Canada added uncertainty, driving safe-haven demand for gold and impacting commodity prices. The interconnectedness of global trade and geopolitical risks with domestic performance underscored market volatility.
Commodity Trends
Gold (UP)
Gold surged to record highs, with prices in India reaching ₹1,23,000-₹1,27,950 per 10g and spot gold hitting $4,116.77 per ounce, driven by US-China trade tensions, expectations of US interest rate cuts, strong central bank buying, and festive demand. Analysts predict it could hit $4,900 by 2026 or ₹1.5 lakh by early 2026, reflecting ongoing geopolitical and economic uncertainties, though technical indicators show overbought conditions.
Silver (UP)
Silver reached all-time highs, with MCX futures up 3.44% and prices in India at ₹1,79,000 per kg, driven by similar factors as gold, including safe-haven demand, supply constraints, political uncertainty, and a London market shortage. Emkay Wealth forecasts a 20% rise to $60 per ounce due to supply deficits and industrial demand, though near-term volatility is cautioned.
Crude Oil (UP)
Oil prices rose over 1.4-1.5%, with Brent crude above $63, supported by hopes for trade compromises and diplomatic talks, though OPEC forecasts demand growth while IEA warns of a record surplus. Rising prices contributed to rupee weakness and influenced energy sector sentiment, with bearish signs like contango in futures reflecting market worries.
Steel and Base Metals (DOWN)
Steel prices fell, with HRC down INR 2.2k/t and longs down INR 7.5k/t, leading to reduced EBITDA for companies, though lower coking coal costs may offer relief. Aluminum and copper declined due to tariff threats and supply issues, such as Codelco's output hitting a 20-year low, indicating pressure from global trade tensions.
Expert Opinions
Expert opinions were mixed, with analysts projecting range-bound trading for Nifty, with support at 25,000 and potential for a rally to 25,400-25,800 if key resistance levels are breached, driven by Q2 earnings. Brokerages issued 'Buy' calls on stocks like CDSL, Eternal, Delhivery, SBI, Adani Ports, and DOMS Industries, targeting up to 56% upside, emphasizing opportunities in volatile markets. Raamdeo Agrawal advised buying stocks at the right price and ignoring noise, while warning of a slowdown in listed IT and highlighting growth in Global Capability Centers. For commodities, experts maintained bullish outlooks on gold and silver but cautioned on volatility, with projections for AI-driven economic boosts and sector rotations in renewables, infrastructure, and financials.
Market Outlook
Short-Term Projection
In the short term, markets are expected to remain volatile, influenced by Q2 earnings performance, global trade tensions, and geopolitical events. Technical analysis suggests Nifty has support at 25,000-25,200, with potential for gains to 25,350-25,500 if resistance levels are sustained. FII inflows, domestic resilience, and sector-specific strengths in financials, renewables, and infrastructure may provide cushion, but caution is advised due to profit-taking in sectors like IT and FMCG, regulatory risks, and muted earnings warnings. Investors should monitor earnings reports, global developments, and policy actions for directional cues.