Weekly Musings – Indices recover in the week to February 06, 2026

7 Feb 2026 , 11:21 PM

THREE KEY EVENTS INFLUENCED THE MARKETS THIS WEEK

It was a prolonged trading week with the markets trading for 6 days (including the budget day trading). The impact of the Union Budget was negative on the markets as the markets reacted negatively to the spike in STT on futures and options. Also, the gross borrowings of the central government was sharply higher at ₹17.22 Trillion for FY27, which led to a sell-off in the markets. While the markets recovered, it still ended sharply lower for the day.

The second big event was the announcement of the Indo-US trade deal. What really mattered to the markets was that the deal would reduce the tariffs on Indian exports to the US from 50% to 18%. This was subject to India not buying any oil from Russia, although this part of the deal remains shrouded in mystery. Practically, India just cannot shift oil purchases from Russia to the US since future purchase are generally contracted. Also, India has invested in the Chennai-Vladivostok maritime corridor. India would surely want to leverage these advantages, so it is all in the fine print. But sentimentally, it is a positive.

The third event was the monetary policy announced by the RBI on 06-February. The RBI held rates at 5.25% and also maintained the stance at Neutral. While the GDP growth estimates for FY26 were raised by 10 bps to 7.4%, the inflation estimates for FY26 were also raised by 10 bps to 2.1%. Markets were not too impressed by the absence of a rate cut. After the euphoria of the trade deal, this was disappointing leading to a small correction in markets.

HOW BROAD INDICES PERFORMED IN THE WEEK TO 06-FEB

Here is a look at 5 generic indices that represent most facets of the Indian equity markets.

Index	LTP	1-Week Ago	Weekly High	Weekly Low	Weekly Returns
BSE Sensex	83,580.40	82,269.78	85,871.73	79,899.42	+1.59%
Nifty 50	25,693.70	25,320.65	26,341.20	24,571.75	+1.47%
Nifty Next 50	69,058.40	67,839.85	69,884.15	65,300.05	+1.80%
Mid-Cap 100	59,502.70	58,432.00	60,456.80	56,126.55	+1.83%
Small Cap 100	16,938.65	16,879.10	17,366.10	16,136.90	+0.35%
Data Source: NSE / BSE

The structure of most of the generic indices moved in tandem with the flow of events. All the indices touched their lows on budget day and touched their weekly highs on the day the Indo-US trade deal was officially announced. The indices like the Mid-Cap index and the Nifty Next 50 index were the star performers for the week. Clearly, there was some value buying happening beyond the true-blue large caps. The gainers were largely focused on the gainers from the Indo-US trade deal like chemicals, textiles, auto, jewellery etc.

One factor that marked the week was the extreme volatility in the market. For example, the high / low gap was as high as 7.2% for the Nifty 50, 7.0% for the Nifty Next 50, and 7.7% for the Mid-Cap index. Clearly, that is much higher than the regular index movements, but that can be attributed to the contrasting impact of the 3 major events during the week. The good news was that the volatility index (VIX) actually sobered in the week from 13.63 to 11.94. That is clearly a sign that the fear factor in the market is reducing rapidly.

 

HOW SECTORAL INDICES PERFORMED IN THE WEEK TO 06-FEBRUARY

Here, we look at four sectoral indices that represent bulk of the Nifty basket weight.

Index	LTP	1-Week Ago	Weekly High	Weekly Low	Weekly Returns
Auto Index	27,519.55	26,750.35	28,095.85	25,928.50	+2.88%
Bank Nifty	60,120.55	59,610.45	61,764.85	57,783.20	+0.86%
NBFC Index	31,579.20	30,928.45	31,948.95	29,300.15	+2.10%
FMCG Index	51,882.75	51,215.20	51,935.55	49,336.50	+1.30%
Healthcare	14,139.85	13,893.85	14,400.45	13,551.35	+1.77%
IT Index	35,611.05	38,036.15	40,301.40	35,211.95	-6.38%
Metals Index	11,943.15	11,827.55	12,104.30	11,187.20	+0.98%
Oil & Gas	12,208.20	11,791.70	12,293.40	11,401.45	+3.53%
Data Source: NSE / BSE

Here are key takeaways for investors from the sectoral returns in the week.

• Auto index was among the better performers for the week, gaining 2.88%. That was hardly surprising. Among the major gainers from the Indo-US trade policy is the auto and auto components sector, which has a large share of exports to the US. That would not get a lower tariff access, and that was visible in the auto index movements. Big gainers were the auto components companies like Bosch, Bharat Forge; while TVS Motors and Bajaj Auto were gainers among two-wheelers.
• Banking was relatively subdued in the week, although it did gain close to 90 bps post the trade policy announcement. The dampener came from the Union Budget, which announced a spike in the gross borrowings to ₹17.22 Trillion, which had the potential to raise bond yields in India. That is not great news for banks, leading to limited gains. In the PSU space, SBI and Bank of India led the index higher. Among private banks, the big-ticket banks like ICICI Bank and HDFC Bank were relatively subdued.
• Unlike the banks, the NBFCs showed much better moves during the week, gaining 2.1% over the previous week. The impact of higher bond yields would be much lesser on NBFCs as compared to banks. Also, the monetary policy had some positive announcements in giving more freedom to NBFCs. That was the positive for NBFCs. Chola Finance, Shriram Finance were among the major gainers in NBFCs.
• It was rather surprising to see FMCG stocks gain 1.3% for the week. Clearly, a lot of the interest came from the low inflation indications in the Union Budget and the monetary policy, which could boost consumer spending. Also, in a highly volatile week, the FMCG stocks with a strong domestic demand focus, emerged as natural hedges for investors. Nestle and Marico were among the top performing FMCG players in the week.
• Healthcare was another big gainer from the Indo-US trade deal. There have been concerns over the pricing pressure that Indian generic exporters are facing in the US market. The trade deal is expected to make access easier for the healthcare companies. Of course, the budget also had some sops for medical tourism in India. Torrent Pharma and Lupin were among the gainers; while Mankind came under pressure.
• IT was the show-spoiler in the week, losing nearly -6.4% for the week. The fall came after global IT stocks corrected sharply after Anthropic announced its latest AI tool, which would largely reduce the need for IT outsourcing. In fact, Anthropic AI claims to replace the current software services model. Most Indian IT companies rely on outsourcing for their core business and that could shrink rapidly if Anthropic AI has the desired impact. The sell-off was heavy across Wipro, TCS, and Infosys during the week.
• The metals index gave a positive performance, but the volatility in gold and silver during the week spilled over to other metals too. That led to relatively subdued returns on the metal stocks. Gainers included JSW Steel, Jindal Stainless, and SAIL.
• Oil & Gas had another positive week with returns of over 3.5% for the week. With Brent Crude staying around $68/bbl, most of the upstream oil companies are having a good run. Also, improved gross refining margins (GRMs) and better marketing margins have also helped the downstream companies. IOC announced stellar results. ONGC, BPCL, and IOCL were among the big gainers in the week. Reliance also supported the rally.

Last week, FPIs turned net buyers after a long time, although the buying was relatively modest at $897 Million. However, a few swallows do not make a summer, so we need to see more evidence of FPI support and a revival in equities. For now, global investors continue to be cautious, but the trade deal is likely to drive sentiments for now.