Indian Markets Close Marginally Higher as Nifty Holds 25,000 Amid Sectoral Divergence

Indian equity markets closed marginally higher on Monday after a choppy session, as investors engaged in selective buying following a near 8.5 per cent rally over the previous week. The Sensex ended the day up 107.25 points, or 0.13 per cent, at 81,106.65, while the Nifty settled 58.25 points, or 0.23 per cent higher, at 25,044.65. During the session, the Sensex swung between an intraday high of 81,339.41 and a low of 80,519.31.

Ajit Mishra, Senior Vice President of Research at Religare Broking, noted that after the sharp preceding rally, some market consolidation remains healthy. He highlighted that foreign investors have injected over $4.1 billion into Indian equities during November, providing a supportive floor against market dips.

Sectoral performance was mixed during the session. PSU Banks led the gainers with a 3.7 per cent surge, while Pharma and Healthcare also finished in positive territory. Conversely, Information Technology was the primary drag, falling over 1.2 per cent amid ongoing global concerns regarding artificial intelligence-related capital expenditure. Metals and Telecom sectors also registered losses. The Bank Nifty outperformed the broader market, closing above 59,700 and breaking out of its four-month trading range between 54,000 and 58,500.

Broader market indices saw limited movement, reflecting caution among investors following recent gains. The Nifty Midcap 100 rose 0.55 per cent, and the Smallcap 100 edged up 0.1 per cent. Data from Motilal Oswal Mutual Fund indicated that in October, the Nifty 50 was the sole major index to post positive returns at 1.91 per cent, whereas microcap and smallcap indices declined by 8.95 per cent and 5.81 per cent, respectively, demonstrating a concentration of recovery within large-cap stocks.

International financial institutions adjusted their stances on Indian equities. HSBC upgraded India to overweight from neutral in its Asia equity strategy, citing resilient earnings, reasonable valuations, and strong credit growth, while simultaneously downgrading China to neutral. Herald van der Linde, Head of Equity Strategy at HSBC Asia Pacific, stated that India offers diversification and low volatility compared to Asian markets heavily dominated by AI stocks.

Additionally, Citi Research raised its Nifty target to 28,000 from 26,000, projecting an upside of approximately 12 per cent, driven by resilient domestic earnings, lower crude oil prices, and a moderate global pace of AI capital expenditure. Citi extended its target valuation multiple to 18 times and its horizon to December 2027. Jefferies also increased India's allocation in its Asia-Pacific ex-Japan relative-return portfolio by two percentage points to 14 per cent, maintaining an overweight stance as investors explore opportunities beyond technology supply chains.

In foreign exchange markets, the rupee retreated slightly, snapping a five-day winning streak following dollar purchases by state-run banks ahead of a market holiday. The USD/INR pair traded near 93.70, with Dilip Parmar of HDFC Securities identifying support at 93.50 and resistance at 94.30. In commodities, WTI crude hovered around $91 per barrel, COMEX gold rose 1.3 per cent to $4,130, and silver gained 2.2 per cent to $53.10.

"The recent market consolidation and strong foreign institutional inflows indicate underlying resilience in large-cap Indian equities. Upgrades from major brokerages like HSBC, Citi, and Jefferies reflect confidence in domestic earnings growth and credit expansion. For entrepreneurs and businesses, this macroeconomic stability signals a favorable environment for capital raising and long-term planning, even as global macroeconomic variables like inflation prints and crude prices continue to dictate near-term sentiment." — Dr. Shishir Gupta, Founder & CEO, StartupLanes