Markets extend gains as optimism returns to Dalal Street Nifty Nears 26,300
Indian equity markets traded firmly higher on Friday, extending the recent rebound as positive global cues, steady domestic institutional buying and strength in automobile stocks combined to lift investor sentiment. The benchmark indices posted broad-based gains, with the Sensex rising over 400 points and the Nifty 50 inching closer to the 26,300 mark during intraday trade, signalling improving risk appetite at the start of the year.
At around 11:50 am, the 30-share BSE Sensex was trading 437.57 points, or 0.51 percent, higher at 85,626.17. The NSE Nifty 50 advanced 141.75 points, or 0.54 percent, to 26,288.30. Market breadth remained supportive, with nearly 2,183 stocks advancing, 1,204 declining and 165 remaining unchanged on the NSE.
Global markets provide a supportive backdrop
One of the key drivers behind the rally was the firm tone across global equity markets. Asian indices traded in positive territory, reflecting improved sentiment after a volatile end to 2025.
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South Korea’s Kospi was higher
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China’s Shanghai Composite traded with gains
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Hong Kong’s Hang Seng index advanced in early trade
US equity futures were also trading higher by up to 0.7 percent, pointing to a positive opening for Wall Street later in the day. The upbeat global cues helped Indian markets sustain early gains and encouraged fresh buying in index heavyweights.
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Large-cap buying lifts benchmarks
Buying interest was clearly visible in large-cap stocks, which provided stability and momentum to the indices. Reliance Industries extended gains for the second straight session, rising nearly 1 percent, while select metal and PSU names also contributed positively.
Hindalco Industries, Coal India and Bharat Electronics emerged as the top gainers on the Nifty 50, rising up to 2 percent. On the downside, ITC and Bajaj Auto were among the major laggards, declining up to 4 percent.
Commenting on the trend, G Chokkalingam, Founder and Head of Research at Equinomics Research, said, “The monthly sales data from auto companies as well as business updates from other sectors signal a likely improvement in December quarter earnings, lifting markets.” He added that a positive earnings season, a favourable Union Budget and progress on a potential India–US trade agreement could act as key triggers for markets in the coming months.
Domestic institutional support offsets FII selling
Another important factor supporting the rally was the continued buying by domestic institutional investors (DIIs), which helped cushion the impact of ongoing foreign fund outflows.
Ponmudi R, CEO of Enrich Money, noted, “Steady domestic institutional inflows continue to provide broader support, helping offset aggressive selling by foreign investors.” This steady participation from DIIs has been a recurring theme in recent months and remains a key pillar of market resilience.
Rupee stability adds comfort
In the currency market, the Indian rupee traded in a narrow range and showed marginal appreciation in early trade. The rupee strengthened by around 6 paise to trade at 89.92 against the US dollar.
Forex market participants said the USD/INR pair is likely to remain range-bound, with the Reserve Bank of India actively defending the 90 level. While sustained foreign fund outflows continue to cap sharp gains in the rupee, the stability in the currency provided additional comfort to equity investors.
Auto stocks shine on strong sales data
Automobile stocks were among the standout performers, extending their recent rally as companies began releasing encouraging December sales numbers. The Nifty Auto index rose nearly 1 percent, marking its fourth consecutive session of gains.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, highlighted the significance of the data, saying, “The impressive 25.8 percent year-on-year increase in passenger vehicle sales in December bodes well for the auto industry. More importantly, this data confirms the growth momentum in the economy.” He added that while growth may moderate, sustaining this momentum is crucial for ensuring earnings growth and market stability.
Key factors behind the market rise
The rally on Dalal Street was supported by a combination of factors:
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Positive global cues boosting risk sentiment
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Large-cap buying, particularly in metals and select PSU stocks
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Steady DII inflows, offsetting foreign selling pressure
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Rupee stability, easing macro concerns
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Strong auto sales data, reinforcing confidence in domestic demand
Together, these elements created a favourable environment for equities, despite lingering global uncertainties.
Technical outlook remains constructive
From a technical perspective, analysts believe the Nifty is approaching a crucial zone. Devarsh Vakil, Head of Prime Research at HDFC Securities, said that a sustained move above the 26,234 level could signal a breakout from the current consolidation phase. “Such a move may open the way for a retest of record highs,” he noted, adding that the 25,900 level is likely to act as immediate short-term support.
Outlook: cautious optimism prevails
While the near-term trend appears positive, market participants remain watchful of upcoming triggers, including quarterly earnings, global central bank cues and geopolitical developments. For now, the combination of supportive global markets, resilient domestic demand and institutional buying is helping Indian equities build on recent gains, keeping investor sentiment cautiously optimistic.
