Broader indices outperform; over 100 small-cap stocks surge up to 29%

Market This Week

• Mid-cap and small-cap indices rose 2-3%, driven by defense stocks.
• Nifty faces resistance at 25,450–25,500; Union Budget seen as key market trigger
• FIIs sold this week; DIIs bought Rs 14,398 crore in equities.

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The broader market outperformed the benchmark indices during the week, with the BSE Mid-cap and Small-cap indices gaining between 2–3 percent led by defence, energy, oil & gas stocks.

For the week, the BSE Sensex climbed 732.08 points, or 0.89 percent, to close at 82,269.78, while the Nifty50 advanced 272 points, or 1.08 percent, to settle at 25,320.65. However, on a monthly basis, both indices declined 3 percent each.

Foreign Institutional Investors (FIIs) turned buyers on Friday, purchasing equities worth Rs 2,251 crore. However, they remained net sellers for the week, having offloaded shares worth Rs 730 crore. Meanwhile, Domestic Institutional Investors (DIIs) continued their support, buying equities worth Rs 14,398.03 crore.

Among sectors, the Nifty Defence index outperformed with a nearly 9 percent gain, followed by Nifty Energy, which rose 6 percent. The Nifty Oil & Gas index added 4 percent, while Nifty Realty and Metal indices climbed 3 percent each. On the other hand, the Nifty IT, FMCG, and Healthcare indices declined by 0.5 percent each.

"Indian equities traded in a volatile yet cautiously constructive tone during the week, shaped by domestic policy expectations and evolving global cues. Initially sentiment was subdued due to renewed tariff-related concerns and mixed corporate earnings, although optimism surrounding the India–EU trade agreement lent support, particularly to trade-oriented sectors. Select pockets of weakness were observed in Autos and Beverages amid intensifying competitive pressures," said Vinod Nair, Head of Research, Geojit Investments.

"Market sentiment improved mid-week following a favourable economic survey that reinforced expectations of robust FY27 growth and a benign inflation outlook. However, risk appetite weakened toward the end of the week ahead of the Union Budget, with volatility resurfacing amid FII outflows and rupee depreciation. Profit booking intensified in Metals and IT amid a firmer dollar and global liquidity concerns, with sentiment turning cautious ahead of clarity on the incoming Fed Chair. Markets remain wary that a potentially stronger inflation focus could prolong tight financial conditions and weigh on emerging markets."

"Looking ahead, markets are expected to remain largely event-driven, with the Union Budget acting as the key domestic trigger. Expectations are balanced between growth support and fiscal prudence. Cyclical sectors may continue to show relative resilience if supported by policy measures, while IT and export-oriented stocks are likely to remain sensitive to global macro cues," Nair added.

"Overall, markets are expected to stay range-bound, underpinned by strong domestic fundamentals but constrained by external uncertainties, including geopolitical risks, global tariff developments, and the U.S. Fed’s evolving policy outlook," he said further.

The BSE Small-cap index jumped 3 percent, led by sharp gains in Sharda Cropchem, Hindustan Copper, MIC Electronics, SPEL Semiconductor, Panorama Studios International, JITF Infralogistics, Mahindra Logistics, Moschip Technologies, Walchandnagar Industries, Garden Reach Shipbuilders & Engineers, Manorama Industries, MTAR Technologies, Data Patterns (India), Punjab Chemicals & Crop Protection, Sterlite Technologies, and Taneja Aerospace and Aviation, all of which surged more than 20 percent each.

Meanwhile, Vimta Labs, Sri Adhikari Brothers Television, OneSource Specialty Pharma, IFB Industries, South Indian Bank, SBFC Finance, and Best Agrolife declined over 15 percent.

Where is market headed?

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

Going ahead, the immediate resistance for Nifty is placed in the 25,450–25,500 zone, with the Index failing to decisively close above this zone after attempting twice in the last six sessions. A decisive breakout above this zone could result in Nifty extending its pullback towards 25,650, followed by 25,800 in the near term. On the downside, the 200-day EMA zone of 25,200–25,150 zone is likely to act as a strong support.

Ajit Mishra – SVP, Research, Religare Broking

Our view on the Nifty remains unchanged. Sustenance above the 25,350 level could result in a further rebound towards the 25,600 zone, while a decisive break below the long-term moving average, the 200 DEMA around 25,150, may derail the recovery and drag the index towards the 24,750–24,900 zone. With all eyes on the Union Budget, we expect heightened volatility during the special trading session on Sunday and suggest preferring a hedged approach.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities

Technically, this market action indicates a consolidation movement in Nifty near the crucial resistance. The market is awaiting a fresh direction from the key economic event of Union Budget 2026 which will be presented in the Parliament on Sunday-1st Feb. Hence the outcome of this event could open fresh moves in the marketon on either side. Immediate support is placed at 25200 and a sustainable upmove above 25450-25500 levels could possibly open sharp upside ahead.

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