Market Outlook - January 2026

Market update

Equity Market Performance
As the year draws to a close, Indian equity market in
December ended with modest losses. Nifty slipped 0.3%,
while the Mid-cap indices and small-cap indices declined
by 0.9% and 0.6% respectively. Metals led the rally with an
8% surge, while Oil & Gas (+1.8%) and Auto (+1.3%) followed
as notable gainers. Conversely, Capital Goods, Consumer
Durables, and Realty slipped around 3% each, emerging as
the key laggards. Most global markets ended on a positive
note, with South Korea leading the rally (+7%), followed by
Taiwan and Malaysia (both up around 5%).
In contrast, France remained flat (0.0%) while Hong Kong
slipped (-0.9%). Sensex and Nifty closing marginally lower
amid thin year-end trading and persistent foreign fund
outflows. FIIs sold equities worth about $ 2.63 billion during
the month, while DIIs continued to provide strong support
investing $ 8.8 billion during the same period.

Macro Update
The rupee remained volatile, breaching the 90 mark midmonth
and touching an all time low above ₹91 before RBI
interventions helped it recover to around ₹89.8 by month-
end. RBI cut the repo rate by 25 bps to 5.25% and maintained
a neutral stance, while Fitch upgraded India’s FY2026 GDP
growth forecast to 7.4%. Globally, the U.S. Fed reduced rates
for the third time this year, and the Bank of Japan raised its
benchmark rate to the highest level since 1995. Commodities
saw strength in metals and gold, while crude oil remained
subdued.