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Below the Quote on Weekly Note 18th October by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd.

Markets Extend Winning Streak for Third Week; Focus Shifts to Earnings and Global Data

Market Summary

Equity markets extended their winning streak for the third consecutive week, supported by strong domestic cues and positive global sentiment. While the tone remained subdued in the initial sessions due to renewed trade tensions between the U.S. and China, sustained institutional buying and better-than-expected corporate earnings lifted the benchmarks as the week progressed.
As a result, both key indices registered robust gains, with the Nifty surging 1.68% to close at 25,709.85 and the Sensex advancing 1,451.37 points or 1.76% to end at 83,952.19.

Key Market Drivers

The week began on a cautious note following fresh U.S.–China trade tensions after President Donald Trump raised tariff threats in response to Beijing’s tighter controls on rare earth exports. However, the sentiment improved sharply as a series of encouraging macroeconomic indicators emerged. Retail inflation (CPI) eased to 1.54% in September 2025 from 2.07% in August, aided by a favorable base effect and softer prices of food, fuel, and household essentials. Wholesale inflation (WPI) too moderated to 0.13% in September, reflecting broad-based price cooling across key commodities.
Adding to the optimism, steady foreign inflows, firm domestic demand, and resilience in the rupee further reinforced confidence in the market’s uptrend.

Sectoral Snapshot

The rally was broad-based, though sector-specific momentum played a defining role. The banking index emerged as the standout performer, hitting a fresh record high amid strong participation from both private and PSU banks. Meanwhile, Realty, FMCG, and Financials advanced between 2.4% and 4.1%, supported by festive-season demand and upbeat earnings. In contrast, IT stocks came under pressure, slipping 2.3% on profit booking post-results, while metals ended marginally lower on global price corrections.

Among the broader indices, midcaps remained largely flat and smallcaps declined by 0.6%, indicating selective participation and cautious undertone amid the ongoing earnings season.

Key Events to Watch

The upcoming truncated trading week will be event-heavy, with several key triggers lined up for investors. Market participants will first react to quarterly earnings from heavyweights such as Reliance Industries, HDFC Bank, and ICICI Bank, which are likely to set the tone for the broader market. On October 21, the one-hour Diwali Special Muhurat Trading session, marking the beginning of Samvat 2082, will be closely watched for sentiment cues and festive cheer, with strong retail and institutional participation anticipated.

The Q2FY26 earnings season will continue in full swing, with major companies including Colgate, Hindustan Unilever, Dr. Reddy’s Laboratories, SBI Life Insurance, Coforge, and Kotak Mahindra Bank 

scheduled to report their results. These announcements will offer vital insights into margin trends, demand strength, and sectoral performance as India enters the festive quarter.
Globally, developments around the proposed U.S. tariffs on China, along with movements in crude oil prices and currency, will remain crucial in shaping global risk appetite and investor sentiment.

Technical Outlook

* Nifty (25,709.85): The index successfully surpassed its trendline resistance at 25,450 and also the June high of 25,669.35. We are now eyeing the potential to retest to the record high i.e. 26,277.35 and inch further higher howeverit may face an immediate resistance near 26,000. On the downside, support is placed at 25,450, with a stronger base around 25,150.

* Bank Nifty (57,713.35): The banking index scaled a new record high, backed by strong participation across private and PSU banks. The next upside targets are placed at 58,500 and 60,000, while supports are identified at 56,500 and 55,800 in case of profit-taking.

* Broader Indices: The broader market setup remains mixed. Selectivity is advised, as midcap and smallcap stocks continue to exhibit divergent trends.

Strategy Ahead

The market enters the new week with a optimistic outlook. Cooling inflation, robust domestic macro fundamentals, and strong earnings momentum offer a constructive setup for the medium term. However, investors should stay vigilant to external risks, including global trade tensions and geopolitical developments, which could lead to short-term volatility.

Traders may continue to adopt a buy-on-dips approach, with a focus on sectors demonstrating consistent earnings visibility—particularly banking, FMCG, and consumer durables. IT and export-oriented stocks may remain volatile amid global uncertainty. Within the broader market, preference should be given to fundamentally sound large and midcap stocks over smallcaps for long trades.

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