CHENNAI: Indian equity markets ended the first week of the new year on a strong note on Friday (January 2) with benchmark indices posting sharp gains and investor sentiment turning decisively positive after a subdued start to the week. The rally was broad-based, led by banks, autos and select heavyweights, as domestic factors outweighed muted global cues amid holiday-thinned overseas markets.
The BSE Sensex surged more than 550 points to close near the 85,760 mark, while the NSE Nifty 50 settled at a fresh record high around 26,330. Buying interest gathered momentum as the session progressed, with benchmarks holding firm through the closing hour, signalling sustained confidence rather than short-covering-driven gains. Market breadth was firmly positive, with advancing shares clearly outnumbering decliners on both exchanges.
Banking and financial stocks emerged as key drivers of the rally, supported by expectations of stable asset quality and continued credit growth. The Bank Nifty crossed the psychologically important 60,000 level during the session, reflecting renewed interest in large private lenders and select PSU banks. Auto stocks also saw healthy buying, aided by optimism around December sales numbers and improving demand conditions, while metal and power stocks added to the upside on selective value buying.
Consumer-facing stocks, particularly in the FMCG space, lagged the broader market as investors rotated out of defensives into higher-beta sectors. Some heavyweight stocks in the staples segment remained under pressure, capping gains in that pocket, even as the overall tone of the market stayed constructive. Information technology stocks showed mixed trends, with traders largely awaiting clearer global cues and earnings commentary.
The upbeat close came despite the absence of strong global triggers, as several international markets remained shut for New Year holidays. Domestic investors appeared encouraged by expectations of a resilient earnings season, stable macroeconomic indicators and continued policy support for growth. Although foreign institutional activity remained cautious, steady domestic institutional flows helped provide support to the market throughout the day.
"Selective buying across autos, metals, and banking stocks reinforced investor confidence and supported the broader market structure. While stock-specific volatility was evident—most notably following sharp selling pressure in ITC—the broader market continued to draw strength from resilient consumption trends and sustained government-led capital expenditure. Expectations around the upcoming earnings season remain constructive, particularly for banking, infrastructure, consumer goods, and manufacturing-linked sectors," said R Ponmudi, CEO at brokerage and wealth management firm Enrich Money.
Overall, Friday’s session reinforced the positive undertone with which Indian markets have entered 2026. The strong close at record levels suggests investors are positioning for an improving earnings outlook, even as they remain selective and alert to global risks. With momentum building in key sectors, market participants will now look for confirmation from upcoming corporate results and macro data to assess the sustainability of the rally in the days ahead.