Market outlook for next week (05-Jan to 09-Jan)

29 Jan 2026 , 01:44 PM

SECTORAL STORY FOR WEEK TO JANUARY 02, 2026

The week to January 02, 2026 saw Nifty and Sensex close in the positive on the back of support from domestic institutions. The week saw FPIs outflows of $(1,722) Million. Rupee closed beyond ₹90/$ level this week, after staying under 90 for most of the week.

Sectoral Index	Weekly Returns	Index (02-Jan)	Index (26-Dec)
Nifty Metals	5.70%	11,421.85	10,806.15
Nifty PSU Banks	4.98%	8,699.90	8,287.45
Nifty CPSE	4.32%	6,590.60	6,317.60
Nifty Automobiles	3.83%	28,803.65	27,739.85
Nifty Oil & Gas	3.19%	12,340.05	11,958.15
Nifty Mobility	2.61%	23,490.90	22,893.35
Nifty Infrastructure	2.10%	9,765.75	9,564.45
Nifty Banks	1.93%	60,150.95	59,011.35
Nifty Realty	1.77%	898.80	883.15
Nifty Private Banks	1.76%	28,902.90	28,403.85
Nifty MNC	1.67%	30,875.15	30,367.30
Nifty Non-Banks	1.31%	32,381.50	31,962.25
Nifty Consumer Durables	1.13%	37,239.40	36,823.70
Nifty Chemicals	0.36%	29,054.50	28,950.70
Nifty Capital Markets	0.26%	4,682.65	4,670.50
Nifty Healthcare	0.18%	14,725.65	14,699.00
Nifty India Defence	0.16%	7,786.75	7,774.35
Nifty IT	-0.65%	38,320.30	38,572.30
Nifty India Digital	-0.69%	9,521.00	9,587.55
Nifty FMCG	-3.72%	53,078.80	55,132.05

Data Source: NSE

For the week, 17 sectors gave positive returns, while 3 gave negative returns. What is relevant is that a total of 13 sectors rallied more than 1% for the week. Metals, PSU Banks, Autos and Oil & Gas saw smart gains; while FMCG saw heavy pressure, followed by IT sector. FMCG was the only sector to correct more than -1% for the week.

For the week; metals gained from a shift out of precious metals to industrial metals on hopes of a major supply shortfall. PSU banks are expecting a sharp rebound in Q3 numbers, while in the case of Automobiles, the sales numbers have been phenomenal in the December quarter. Oil & gas stocks got a boost from low crude prices and higher GRMs.

Average returns of the 20 sectors stood at +1.61%. The top 5 sectors delivered 4.40% returns, while top 10 sectors gave returns of 3.22%. Bottom 10 sectors delivered -0.95%, showing a rather skewed market at the extremes. Here is a quick recap.

WEEK THAT WAS; THE GOOD, THE BAD, THE UGLY

On the positive side, IIP growth for November bounced from -0.06% to +6.68% on the back of an export revival. The government is planning a massive push to defence spending in the Union Budget, which will be positive for defence stocks. Auto sales in 2025 touched a record high after GST cuts. Meanwhile, 2025 was a record year for IPOs at ₹1.75 Trillion, with the upcoming year 2026 likely to see IPOs worth ₹2.50 Trillion.

On the downside, fiscal deficit data shows pressure on net tax revenues. Fiscal deficit could spill over beyond 4.4% for FY26. The sharp fall in ITC post the Sin Tax imposition resulted in a sell-off in cigarette stocks, pulling down the entire FMCG index. The rupee continued to be under pressure, closing at ₹90.22/$ for the week. For 2025, FPIs were net sellers to the tune of $27 Billion in equities, something that will be an overhang for equity markets.

STOCK MARKET TRIGGERS FOR COMING WEEK TO JANUARY 09, 2025

Here are key triggers that will influence stock markets next week.

• The big focus for the markets in the coming week will be the first estimate of full year GDP for FY26. After 8.0% GDP growth in first half of FY26, it would be interesting to see if the pace can be sustained in the second half too.
• A key data point will be the PMI services, after the PMI manufacturing for December came in at 55.0, the lowest level in 2 years. The services PMI is also expected to see some pressure, so even the composite PMI is likely to be impacted.
• In global data flows; apart from key Fed speeches, the US unemployment data for December 2025 will be out next week. Unemployment is expected to taper slightly from 4.6% to 4.5%; still high enough to justify another rate cut in January 2026.
• Focus will be on gold and silver prices this week to judge the trajectory of precious metals in the new year. Both precious metals corrected on profit booking in the last week, but still close the year about 70% and 150% higher, respectively.
• Key global data points. Construction Spending, Atlanta Fed GDP, API Crude Stocks, JOLTS, Trade Deficit, Labour Productivity, Housing Starts, Unit Labour Costs (US). PMI, CPI, Unemployment (EU); PMI, Household Spending (Japan); Retail Sales, HPI, PMI (UK); and CPI, PPI, PMI (China).

What does this mean for Nifty and Sensex levels in the coming week to January 09, 2026.

PARTING THOUGHTS ON NIFTY AND SENSEX LEVELS

VIX bounced from 9.15 levels to 9.45; despite touching a low of 8.97 for the week. This is normally a level where the Nifty shows a structural bounce.

• Nifty closed at 26,329 Spot. Nifty has immediate support at 26,185 and major support at 25,963. Immediate resistance is at 26,406 and later at 26,628. Nifty remains a Long Trade, unless it breaks below 26,059 with volumes. Shorts only below that!
• Sensex closed at 85,762 Spot. Sensex has immediate support at 85,283 and major support at 84,540. Immediate resistance is at 86,027 and later at 86,770. Sensex remains a Long Trade, till it breaks below 84,882 with volumes. Shorts only below that!

The stock markets next week will be predicated on the India GDP data and the US jobs data. It will also depend on whether RBI continues to support the rupee beyond ₹90/$.