Market Overview
Indian equity benchmarks experienced volatility with the Sensex closing at 82,605.43 (up 0.70%) and Nifty at 25,323.55 (up 0.71%), supported by dovish Fed comments hinting at rate cuts, robust Q2 earnings from companies like L&T Finance and Persistent Systems, and strong festive demand. Domestic institutional investors (DIIs) provided significant support with ₹3,661.13 crore inflows, partially offsetting FII outflows of ₹1,508.53 crore in cash markets. Key sectors including realty, infrastructure, and automotive showed strong gains, while banking and technology exhibited mixed performance. The IMF raised India's FY26 GDP growth forecast to 6.6%, and inflation remained benign with CPI at an eight-year low of 1.54% in September. However, regulatory actions, margin pressures in some sectors, and global trade tensions introduced caution, resulting in overall mixed sentiment with bullish leanings.
Key Sectors in Focus
Realty (UP)
The realty sector surged over 3%, led by gains in stocks like Oberoi Realty, driven by dovish Fed signals, strong domestic demand, and positive earnings. Government initiatives and optimistic analyst views support continued strength.
Banking and Financial Services (MIXED)
This sector showed divergent trends with strong performances from ICICI Lombard, HDFC Life, and L&T Finance reporting profit growth and retail loan surges, while Axis Bank faced a 26% profit decline due to provisions. Overall, asset quality improvements and digital initiatives are positives, but margin pressures and credit costs remain concerns.
Infrastructure and Capital Goods (UP)
Infrastructure stocks gained momentum supported by government missions like Jal Jeevan and AMRUT 2.0, with companies like Welspun Enterprises and Power Mech Projects securing large orders. The water infrastructure market is expected to grow 11.6% annually, driving investor interest.
Technology (MIXED)
The IT sector exhibited volatility with strong results from Persistent Systems (revenue growth and margin expansion) and HCL Tech (deal wins up 41.8%), while Tech Mahindra faced declines despite beating estimates. AI adoption and global uncertainties are key factors, with companies like Infosys securing large contracts.
Automotive (UP)
The automotive sector showed strong revival with 12.9% YoY volume growth in Q2FY26, driven by two-wheelers (up 15%) and commercial vehicles (up 10%), supported by GST cuts, festive demand, and investments from companies like Hyundai. However, Tata Motors faced volatility post-demerger.
Defence (UP)
The defence sector is highlighted as a growth area due to government initiatives and rising demand, with stocks like Hindustan Aeronautics and Bharat Electronics receiving buy recommendations.
Consumer Goods (MIXED)
Consumer sectors showed mixed results with staples growing 5% in sales but flat EBITDA, while jewelry surged 16% in sales and 24% in EBITDA. GST reforms and low inflation boosted discretionary spending, but margin pressures from high raw material costs persisted in companies like Nestlé India and Godrej Consumer.
Stock Spotlight
| Company | Movement | Insight |
|---|---|---|
| Urban Company | 11% surge to ₹167.25 | Stock surged ahead of the end of its one-month shareholder lock-in, which freed 4.15 crore shares for trading. High trading volume of 3.2 crore shares was noted, recovering from a previous losing streak. |
| Axis Bank | 0.4% drop pre-results, but 6% gain over the month | Q2 FY26 net profit fell 26% YoY due to a one-time provision for crop loans, though NII rose 1.9% and asset quality improved. Mixed movement reflects concerns over provisions but optimism from stable advances growth. |
| Persistent Systems | 7.4% surge | Shares rose sharply after strong Q2 FY26 results, with brokerages predicting up to 31% upside. The company expects 19% annual revenue growth and 26% EPS growth, driven by AI offerings and client diversification. |
| IEX | 29.58% drop earlier due to insider trading scandal | Faced a significant stock drop after SEBI barred eight entities for insider trading, impounding illegal gains of ₹173.14 crore. The scandal involved unpublished information on a CERC market coupling order, highlighting regulatory risks. |
| Tata Motors | Nearly 40% drop post-demerger | Shares fell sharply after demerger into separate entities for passenger and commercial vehicles, described as a technical adjustment rather than value loss. Experts reassured no fundamental loss, but volatility persisted. |
| Suzlon Energy | Target price of Rs 70 | Recommended as buy with India's wind power growth projected at 11.04% CAGR to 127.9 GW by 2033. The company has a record 5.7 GW orderbook and strategic acquisitions supporting revenue visibility. |
| JK Cement | 42% surge year-to-date, with a 3.2% drop on merger day | Completed merger with Toshali Cements to streamline operations and improve efficiency. Despite a slight dip on announcement day, year-to-date gains reflect investor optimism about long-term benefits. |
Economic Indicators
Inflation
CPI hit an eight-year low of 1.54% in September 2025, with WPI easing to 0.13%, indicating broad-based disinflation and boosting disposable income.
Interest Rates
Dovish comments from the US Federal Reserve hinting at potential rate cuts have boosted market sentiment, with expectations for lower rates supporting equity rallies. RBI maintained repo rate at 5.50% with a neutral stance.
Gdp
IMF raised India's FY26 GDP growth forecast to 6.6%, citing strong Q1 FY26 growth of 7.8% and robust private consumption. RBI upgraded FY26 growth to 6.8%.
Other Relevant Indicators
FIIs were net sellers in equities but net buyers in debt, indicating mixed investor sentiment. The Indian rupee surged 0.9% to 87.9987 against the dollar, supported by RBI intervention and optimism over India-US trade talks. GST collections surged 9.1% YoY to ₹1.89 lakh crore in September, reflecting robust economic activity.
Global Market Influences
Global influences were mixed, with optimism from Fed rate cut expectations and Asian market rebounds offset by US-China trade tensions and geopolitical risks. Fed Chair Powell's dovish remarks weakened the dollar index and supported Asian currencies like the rupee. Trade disputes, particularly China's WTO complaint against India's EV subsidies, added volatility, while strong US bank earnings provided some support.
Commodity Trends
Gold (UP)
Gold hit record highs above $4,200 per ounce, driven by safe-haven demand from US-China trade tensions, Fed rate cut expectations, central bank purchases, and ETF inflows. In India, prices surged to over Rs 1.27 lakh per 10 grams, with analysts viewing dips as buying opportunities.
Silver (UP)
Silver prices surged over 70% in 2025, with demand forecasted to exceed 20% of global supply by 2027 due to solar panel consumption. Supply constraints and high industrial demand from EVs and renewables are driving prices, with projections of Rs 2,40,000 by end-2026.
Crude Oil (MIXED)
Oil prices showed volatility, with Brent crude falling to $62.27 due to IEA surplus forecasts and trade tensions, but rebounding on geopolitical shifts like Trump's claims about India stopping Russian oil imports. Overall, lower prices supported the rupee and reduced import costs.
Base Metals (MIXED)
Copper and aluminum dropped on US-China trade tensions and slower global growth projections, but potential recovery with dollar weakness and easing deflation in China was noted.
Expert Opinions
Analysts expressed cautious optimism, with buy recommendations for stocks in sectors like banking, IT, and automotive, citing growth potential and margin improvements. Targets include Nifty potentially reaching 25,700-26,000 if resistance at 25,400-25,500 is broken, and Bank Nifty aiming for 60,000-62,500. Experts advise a 'buy on dips' strategy, emphasizing long-term wealth creation supported by economic fundamentals, while cautioning on regulatory risks, margin pressures, and global uncertainties.
Market Outlook
Short-Term Projection
The short-term outlook is positive with expectations for continued bullish momentum driven by dovish Fed signals, strong Q2 earnings, festive demand, and technical indicators suggesting further gains if key resistance levels are broken. However, volatility may persist due to FII outflows, regulatory actions, margin pressures in sectors like banking and consumer goods, and global trade tensions. Investors should monitor earnings reports, RBI policies, and global economic cues for direction.