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Below the Quote on Daily Market Commentary for January 2nd 2026 by Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd

Sentiment has improved over the past few days, with the start of the new year bringing renewed optimism to the markets. Expectations around upcoming Q3 results and supportive policy measures in the Union Budget have helped lift overall sentiment. A key factor has been improved participation in the broader market, particularly selective buying in mid-cap stocks. We expect this positivity to continue into next week, supported by several companies announcing their pre-quarterly business updates. Sectorally, banks saw strong momentum, with the Bank Nifty touching an all-time high, alongside gains in metals and automobiles, while the FMCG sector underperformed, largely due to a sharp decline in ITC. Overall, markets are expected to remain firm, with investor focus on pre-quarterly business updates and the onset of the Q3 earnings season. On Friday, equity markets extended their gains, with the Nifty rising 0.7% (+180 points) to touch a fresh all-time high of 26,340. Broader markets also participated in the rally, as the Nifty Midcap 100 gained 1% and the Nifty Smallcap 100 advanced 0.7%. Sectoral performance was largely positive. Nifty Realty, Nifty PSU Bank and Nifty Metal led the gains, each rising around 1.5%. Automobile stocks remained in focus, with the Nifty Auto index up 1.1%, supported by strong December sales numbers reported by companies. Banking stocks witnessed strong buying interest following positive December quarter business updates, lifting the Bank Nifty to a fresh record high of 60,152.35 during the session. On the policy front, the Ministry of Electronics and Information Technology approved 22 new proposals under the Electronics Components Manufacturing Scheme, entailing projected investments of Rs 41,863 crore and estimated production of Rs 2.58 lakh crore. On the macro front, December GST collections grew 6.1% year on year to Rs 1.75 lakh crore, although net domestic collections declined due to higher refunds.

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