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Informist, Monday, Jan. 5, 2026

By Gopika Balasubramanium

 

MUMBAI – India's headline equity indices are likely to rise in January as the Street focusses on the December quarter corporate earnings, updates on the India-US trade deal, and the Union Budget for 2026-27 (Apr-Mar), analysts said. Analysts even expect indices to notch fresh all-time highs this month. Companies belonging to sectors such as metal, banking, and information technology are likely to rise in January, analysts said. As for Nifty earnings, the Street expects low double-digit earnings growth for the financial year ending Mar. 31, driven by a recovery in the December and March quarters. Some analysts expect investors to track monetary policy decisions of the Bank of Japan as it shifts toward a more hawkish stance following decades of ultra-loose policy. 

 

Analysts expect bouts of volatility in the market this month on account of earnings and ahead of the Budget, likely to be presented on Feb. 1. Even then, they bet markets will gain due to prospects of better December quarter earnings. Traders will also seek comfort from the decent valuations of large-cap companies and strong macroeconomic fundamentals, they said. While experts do not see foreign investors coming back to equities immediately, they forecast outflows to stabilise in the coming months. Some experts also expect the indices to see a pre-Budget rally.   

 

The market is expected to rally in the next two months with decent earnings growth in the coming quarters and stabilisation of outflows from foreign investors, Praveen Bokade, head of research at IDBI Capital Markets & Securities Ltd., said. "...should see some relief rally in the next one or two months and a 3-4% gains before Budget," he added. 

 

For January, the benchmark Nifty 50 is expected to find resistance at 26585 points, according to the median of estimates from 11 broking firms polled by Informist. This is about 1% higher than the all-time high of 26373.20 points hit by the 50-stock earlier on Monday. Meanwhile, support for the Nifty 50 is seen at 25694 points, 2.5% lower than the record high. Historically, the Nifty 50 has been declining in the month of January since 2020.

 

That said, the Street finds great relief from the fact that valuations have eased towards the end of 2025. "The upcoming year is likely to witness a transition from valuation-driven investment returns to earnings growth-driven investment returns," Nitin Rao, chief executive officer at InCred Wealth, said in a note last week. Market valuations have normalised to their long-term averages and the Nifty 50 is currently trading at 20.5 times its one-year forward price-to-earnings ratio, making India relatively more appealing to foreign investors compared to emerging markets, he said.

 

Analysts are hopeful that the new year will provide investors with better returns after the market saw muted gains in the previous two calendar years in a row, and after it underperformed compared to global markets. The Nifty 50 ended 2025 at 26129.60 points with 10.5% returns, slightly better than 9% gains in 2024, but sharply lower than 20% returns in 2023. However, a risk that hangs over such optimism is a delay in the India-US trade deal, or worse, an unfavourable one, they said.

 

"So, (India-US) trade deal is a difficult proposition, we are not counting on the trade deal," Vinit Bolinjkar, head of research at Ventura Securities, said. "If it comes through, it is going to be very, very bullish for the country and despite the deal, we have seen our exports picking up and that is a positive."    

 

To note, the delay in the US-India trade deal has also affected the Indian currency, pushing it to a historic low of 91.0775 against a dollar last month. On Friday, the currency closed at 90.1975 a dollar, settling below the 90-per-dollar mark for the first time since Dec. 18. A likely conclusion of the India-US trade deal after months of prolonged negotiations could result in a recovery in the value of the rupee, analysts said. The Indian unit has been hit by a sudden and sharp deterioration in India's trade balance despite its reasonable fundamentals supporting it, they said. Some equity experts expect the currency to stabilise near 89 a dollar in the near-term. 

 

Q3 EARNINGS 

The Street expects Indian corporates to report earnings growth in their early teens in Oct-Dec aided by both fiscal and monetary measures by the government. An improved demand due to the festival season and the rationalisation of goods and services tax slabs is likely to support earnings. Soft crude oil prices, benign inflation, low interest rates, and better credit growth are also expected to support growth in corporate earnings.  

 

"I think the earnings growth for Q3 (Oct-Dec) will be better than Q1 (Apr-Jun) and Q2 (Jul-Sept), mainly because of the festival season, GST cuts, and then there is a lot of vibrancy in the market about the cuts in the GST on various products," said Bokade of IDBI Capital. "I expect the Nifty 50 companies to report around 12% profit growth this quarter." In the December quarter, analysts expect banks, financial services companies, and metal companies to perform better than companies belonging to other sectors, Bokade said, adding that information technology companies will likely report numbers similar to September. He expects domestic IT firms to benefit from the rupee depreciation.   

 

Consumer and automobile companies are also likely to have better earnings growth in Oct-Dec, boosted by lower GST rates, analysts said. "An improved retail sentiment led to higher discretionary spending across auto, consumer durables and hospitality," Utsav Verma, head of research at Choice Equities, said. "Lower interest rates could also spur real estate, (and an) uptick in demand is expected to reflect in earnings over the upcoming quarters." Some analyts see margins of automobile companies to be under pressure due to high commodity prices during the December quarter. "... margins (of automobile companies) could get shaved off by 25-50 bps," Bolinjkar of Ventura Securities said. 

 

THE BYGONE YEAR

Indian equities gave muted returns in 2025 largely due to punitive 50% US tariffs, high valuations, mediocre earnings growth, relentless selling by foreign investors, and steep depreciation of the Indian currency, analysts said. The Indian equity market's lack of exposure to the artificial intelligence theme, which was a key driver for several global markets last year, was also a constraint for higher returns, analysts said.

 

"Caution stemmed from India's premium valuation, downgrade in domestic earnings and rising uncertainty around 'TRUMPONOMICS' as negotiation tactics intensified, pushing India from a favourable position to the highest tariff (payer) during the year (2025)," Geojit Investments Ltd. said in their India Strategy report earlier in the day. The returns were lagging despite persistent inflows from domestic investors, strong GDP growth, benign inflation, and ample liquidity, among others, they said.

 

Following are the support and resistance levels for the Nifty 50 index for January based on responses from 11 brokerages:

 

Broking Firm	Support 1	Support 2	Resistance 1	Resistance 2
Anand Rathi Shares and Stock Brokers	26100	25900	26500	26700
Axis Securities	26000	25700	26400	26550
Globe Capital Market	25700	25450	26500
HDFC Securities	25700	--	26550	26800
ICICI Securities	25900	--	26500	--
IDBI Capital Markets & Securities	25600	--	26700	--
Indiacharts	25700	25300	27000
Lakshmishree Investment and Securities	26000	25750	26500	27050
LKP Securities	26200	26000	26500	--
Nirmal Bang Institutional Equities	25800	25500	26800	--
NVS Brokerage	26030	25950	26480	26630
Median	25694		26585

 

End

 

US$1 = INR 90.28

 

Edited by Tanima Banerjee

 

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