MARKET SUMMARY
Indian equity benchmarks are set for a positive opening on Friday, January 2, with GIFT Nifty indicating strength ahead of the regular market session. After ending the last trading day of 2025 on a positive note—Nifty 50 closed at 26,129.60 and Sensex at 85,220.60—and starting the first session of 2026 on a flat note, markets are gaining momentum into the second trading day of the year. Global sentiment is mixed, with Asian peers trading higher, while US markets ended 2025 with modest losses across all three major indices.
KEY DRIVERS
– FII Selling Pressure Persists: Foreign Institutional Investors have been net sellers for 8 out of 12 months in 2025, with December alone seeing ₹34,349.62 crore in outflows, the highest monthly exodus since September. This continues to be a key challenge despite strong domestic institutional buying.
– Domestic Institutional Strength: Domestic Institutional Investors have maintained their buying momentum with 48 consecutive sessions of net inflows, providing crucial support to market stability and offsetting FII withdrawals.
– Auto Sector in Focus: Auto sales data is expected to influence sentiment today. The auto index surged over 1% recently and gained 23.45% throughout 2025, making it one of the top-three performing sectors. Key stocks like Ashok Leyland, APL Apollo Tubes, and TVS Motor reached fresh all-time highs on January 1.
– Metal Stocks Momentum: Government-imposed three-year import tariffs on select steel products boosted metal stocks in the previous session, which may sustain their momentum.
SECTORS TO WATCH
Bullish: Auto (strong fundamentals and tariff tailwinds), Metals (import tariff support), Select Pharma (Ajanta Pharma advanced ₹164.30 on January 1).
Cautious: FMCG (witnessed its biggest fall in three years on January 1), Tobacco (ITC declined ₹39.11), Consumer discretionary.
EVENTS
No major domestic announcements are scheduled. Markets will monitor auto sales data releases and global market movements.
RISKS
– Persistent FII Outflows: Continued selling by foreign investors could limit upside, despite DII support.
– Global Uncertainty: Subdued US market cues and potential volatility from geopolitical or economic data releases warrant caution.
CLOSING NOTE
Markets are ready to climb, but it is important to watch FII flows closely. Strong DII support provides a safety net, but external headwinds remain.