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Below the Quote on Weekly Note 11th October by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd.

Markets Extend Gains on Growth Optimism; Inflation and Earnings Data to Steer Direction

Market Summary

Markets extended their recovery for the second consecutive week, gaining over one and a half percent, supported by favorable cues from both domestic and global fronts. The tone remained constructive at the beginning of the week, followed by a brief consolidation phase in the middle. Renewed buying interest in key sectors during the latter half helped the benchmark indices — Nifty and Sensex — close near their weekly highs at 25,285.35 and 82,500.82, respectively.

Key Market Drivers

Investor sentiment strengthened after the World Bank raised India’s FY26 GDP growth forecast to 6.5% from 6.3%, citing robust domestic demand and continued policy momentum. Additionally, easing geopolitical tensions in the Middle East and positive commentary from global leaders — following the review of ongoing India-US trade discussions between Prime Minister Narendra Modi and US President Donald Trump — provided further comfort to the markets.

On the domestic front, macroeconomic indicators continued to display resilience despite minor moderation. The HSBC India Services PMI eased to 60.9 in September from 62.9 in August but remained firmly in the expansion zone, underscoring sustained momentum in the services sector. Importantly, a shift in stance by Foreign Institutional Investors (FIIs), who turned net buyers during the week, further boosted sentiment. Domestic Institutional Investors (DIIs) also maintained their steady buying trend, providing additional support.

Sectoral Snapshot

Sectoral performance was largely positive, led by a sharp rebound in technology stocks, followed by notable strength in pharma, realty, and banking counters. On the other hand, FMCG, metals, and auto sectors witnessed mild profit-taking after their recent outperformance.

In the broader market, both midcap and smallcap indices participated in line with the benchmark trend, gaining in the range of 1.4% to 2.1%. This broad-based recovery reflects renewed buying interest across largecaps and select quality midcaps.

Key Events to Watch

The upcoming week will be event-heavy as focus shifts to key domestic macroeconomic data and a busy Q2FY26 earnings calendar. On the data front, the government will release retail inflation (CPI) figures for September on October 13, followed by wholesale inflation (WPI) on October 14. These readings will be closely tracked for signs of easing price pressures, which could influence the Reserve Bank of India’s policy outlook.

Meanwhile, the earnings season will pick up pace with several large-cap companies set to announce their quarterly results. Investors will keenly watch numbers from IT majors and midcap IT names such as 

Infosys, HCL Technologies, Wipro, Tech Mahindra, and LTIMindtree, along with banking heavyweights Axis Bank, ICICI Bank, and HDFC Bank, as well as conglomerate Reliance Industries. Additionally, results from Avenue Supermarts (DMart), Nestle India, UltraTech Cement, and JSW Steel will offer critical insights into consumer demand trends and industrial performance during the quarter.

Globally, market sentiment will remain sensitive to key US macroeconomic data and central bank commentary. The US inflation report and Federal Reserve Chair Jerome Powell’s upcoming speech are expected to guide global cues on monetary policy direction. Furthermore, investors will closely monitor the recent statement by the US President hinting at additional tariffs on Chinese goods, which could have ripple effects on global trade dynamics and commodity-linked sectors.

Technical Outlook

* Nifty (25,285.35): The index has once again approached a key resistance zone around 25,450. A decisive breakout above this level could trigger an up move toward 25,650 and beyond. On the downside, 25,000 — corresponding to the 20-DEMA — will act as an immediate cushion in case of a dip, followed by support at 24,750.

* Bank Nifty (56,609.75): The banking index maintained strong momentum, supported by gains across both private and PSU banks. We expect the prevailing bullish tone to continue, with potential to retest record highs. Immediate resistance is placed at 57,300 and 57,700, while supports lie around 55,800 and 55,000.

* Broader Indices: Broader indices continue to move largely in tandem with the benchmarks, though midcaps have shown relative strength. This outperformance is expected to sustain in the near term.

Strategy Ahead

The market enters the new week with cautious optimism. The stability in FII inflows and improving domestic macro trends underpin a constructive outlook. However, investors should remain prepared for short-term volatility amid global developments such as the proposed US tariff action on China, key inflation data, and earnings releases.

From a trading perspective, maintaining a “buy-on-dips” approach above key support zones remains prudent. A selective, stock-specific strategy is advisable, focusing on sectors likely to post robust Q2 results. With sectoral rotation in play, preference should be given to stocks demonstrating relative strength within their respective sectors. Meanwhile, defensives such as healthcare and FMCG can serve as effective stabilizers against global uncertainties.

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