Equities likely to maintain up-move

Indian equities are likely to maintain their steady up-move this week, supported by firm domestic macros, healthy earnings and a strong electoral mandate for the ruling NDA in Bihar, which reinforces political stability at the Centre. While global cues remain mixed, easing domestic inflation and renewed progress on India–US trade discussions provide additional support for market sentiment.

With the earnings season concluding, market attention will shift toward broader domestic themes—including early signs of a demand pickup from the festive and wedding season, the evolving interest-rate trajectory, and prospects of higher capital expenditure through the second half of the fiscal year. The reopening of the US government and improving global risk appetite add to the supportive backdrop. Sectorally, information technology, metals, and capital-market-linked names may remain in focus, aided by improving earnings visibility, favourable policy signals, and steady domestic liquidity.

Key events this week, include the UK and Eurozone CPI prints, the US FOMC minutes, and global manufacturing data, which will guide expectations around the pace of global monetary easing.

Last week, Nifty gained 1.6% amid supportive global cues and broad-based domestic optimism. The Nifty Midcap100 and Smallcap100 indices gained 1.6% and 1%, respectively, highlighting strength in the broader market. IT led the upmove with a 3.6% weekly gain as easing concerns around US visa norms lifted demand visibility. Pharma advanced 2.9% supported by strong quarterly results, while infrastructure rose 2.4% on healthy order inflows. The auto sector gained 2% as demand trends continued to improve. Metals were buoyed by firm global prices, driven by tight supply conditions and steady industrial activity. Capital-market-linked stocks also remained active, supported by strong retail participation, elevated SIP flows, and enthusiasm for recent and upcoming IPOs.

Macro trends remained favourable as retail inflation eased sharply to 0.25% in October, well below the RBI’s comfort range, aided by GST rationalisation and moderating food prices. The sharper-than-expected decline strengthened expectations of potential policy easing in the months ahead. Policy momentum also improved, with the Cabinet Committee approving a six-year Export Promotion Mission with an outlay of Rs 25,060 crore—including Rs 20,000 crore dedicated to strengthening the credit-guarantee framework for exporters—to enhance MSME competitiveness and streamline export financing.

Adding to the positive backdrop, Goldman Sachs upgraded India to ‘Overweight’ from ‘Neutral’, reversing its October 2024 stance, and assigned a FY26 Nifty target of 29,000, implying about 14% upside. The upgrade reflects strengthening earnings momentum and policy tailwinds, including prospective rate cuts, liquidity easing, bank deregulation, GST rationalisation, and progress on fiscal consolidation.

On the trade front, the United States has softened its stand on India over trade tariffs, marking renewed progress in trade discussions, which are expected to conclude before the end of the year.

Capital-market activity remained robust, with total market turnover rising 16% Month over Month in October and ADTO at Rs 507 trillion, driven by a 16% jump in F&O notional volumes and a 19% rise in options-premium turnover. Commodity turnover surged 36% MoM to a record Rs 152.5 trillion. Demat additions improved to 3 million, IPO fund-raising touched Rs 408 billion, and mutual-fund MAAUM (+2.6% MoM) alongside record SIP inflows of Rs 295 billion reached new highs—reinforcing strong retail participation across exchanges, brokerages, and AMCs.

Overall, equities are likely to continue their gradual up-move, with strong liquidity and stable fundamentals anchoring the outlook. Easing inflation, improving policy signals, and supportive domestic cues continue to reinforce confidence in India’s macro stability.

(The writer is Head of Research, Wealth Management, Motilal Oswal Financial Services Limited)