Broader indices underperform but these smallcaps gain more than 10%

The Foreign Institutional Investors' (FIIs) extended their selling at they sold equities worth Rs 10403.62 crore, while Domestic Institutional Investors (DII) continued their buying as they bought equities worth Rs 19785.5 crore.

On the sectoral front, Nifty Consumer Durables, Nifty Defence, Nifty Media, Nifty Capital Markets shed 2 percent each, while Nifty PSU Bank, Nifty Healthcare, Nifty Realty, Nifty Oil & Gas down between 1-1.5 percent. On the other hand, Nifty IT index added 3.5 percent and Nifty Metal and Auto indices rose 0.5 percent each.

"Indian equities began the week with profit booking after hitting record highs in the previous week. Early optimism driven by strong Q2 GDP print and robust auto sales was overshadowed by persistent FII outflows, sharp rupee depreciation, and uncertainty over trade negotiations. Sectoral trends were mixed- autos and IT outperformed, on festive demand and favorable currency tailwinds. While banking counters faced intermittent pressure due to regulatory changes and cautious positioning ahead of the RBI policy meeting. Global factors such as rising Japanese bond yields and expectations of BOJ tightening, added to volatility," said Vinod Nair, Head of Research, Geojit Investments.

"Sentiment reversed on Friday after the RBI surprised markets with a 25-bps rate cut, supported by lower inflation forecasts and liquidity measures. This dovish move triggered risk-on buying, lifting rate-sensitive sectors like autos, real estate, and NBFCs, while private banks gained on treasury profit hopes despite NIM concerns. Benchmarks ended the week on a strong recovery note."

"Looking ahead, volatility may persist with a positive bias as investors digest RBI’s dovish action and track global triggers. The US Fed meeting and clarity on India–US trade talks will be key, while Q3 earnings optimism faces risks from rupee swings, widening CAD, and global trade tensions," he added.

The BSE Small-cap index shed nearly 2 percent dragged by Kothari Industrial Corporation, Spectrum Electrical Industries, Thyrocare Technologies, Tuticorin Alkali Chemicals and Fertilizers, Transworld Shipping Lines, TVS Electronics, Transformers and Rectifiers India, LE Travenues Technology (IXIGO), SEPC, Kingfa Science & Technology, PRAVEG and Shakti Pumps (India). However, Nectar Lifesciences, SMC Global Securities, Integrated Industries, InfoBeans Technologies, Birlasoft, Hindustan Copper, Sun Pharma Advanced Research Company, ZF Commercial Vehicle Control Systems India added between 12-23%.

Where is Nifty50 headed?

Vinod Nair, Head of Research, Geojit Investments

Overall, the short-term outlook remains cautiously positive, with a focus on strong corporate earnings in December. However, near-term risks such as a widening current account deficit and global trade tensions continue to pose challenges. The stance of the US Fed on rate cuts will be crucial for maintaining the domestic trend for the month.

Rupak De, Senior Technical Analyst at LKP Securities

The Nifty moved up sharply on Friday, buoyed by the monetary policy outcome. The trend remains positive, with the index sustaining above the 21 EMA. On the hourly chart, the index has given a breakout from its recent consolidation, indicating rising optimism. The RSI has reclaimed a bullish crossover, pointing towards strong momentum.

In the short term, the trend may remain strong, with the potential for the Nifty to move towards 26,300/26,440. Support is placed at 26,060–26,000. Buying on dips may be favoured as long as the index sustains above 26,000.

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

Looking at key levels, the zone of 26,300–26,350 zone is likely to act as an important resistance zone for the Index, which coincides with the previous swing high. Any sustained move above 26,350 could lead to a fresh leg of rally in the Index, potentially taking it higher towards 26,500, followed by 26,700. On the downside, the 20-day EMA zone of 26,000-25,950 is likely to act as a crucial support for the Index.

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