Where is the market headed?
It is a fantastic way to kickstart the new year as the first weekly candle close of 2026 has reached a new all-time high mark. This weekly performance of approximately 1% is the best the market has seen since mid-November. This surge comes after a consolidation period of about 15 to 16 months.
Nifty has been hovering near its all-time high for the last two or three months, and every time selling pressure emerged, a strong buying force neutralized it. Momentum has now shifted in favor of the bulls.
This traction is primarily driven by strong expectations surrounding the upcoming Q3 earnings season and optimism regarding the budget due in February. Only time will tell if this will be a long-term rally similar to those seen after consolidations in 2021-22 and 2023-24. While the post-Covid era saw significant rallies following consolidation, it remains to be seen if 2026 is starting the next major leg of growth.
An interesting aspect of the current all-time high situation is that while the Nifty 50 and Nifty Midcap indices are at new peaks, the Nifty Next 50 and Small Cap indices are still about 12% to 13% away from their respective all-time highs. Micro caps are even further off, sitting 16% to 17% below their peaks.
Participation in this rally has been very selective, and overall sentiment remains a bit jittery. Investors must be careful with their allocations and choose products that are nimble-footed.
The FMCG sector was hit hard this week by taxation reforms affecting stocks like ITC and Godfrey Phillips. In contrast, the market is being led by Metals, PSU Banks, and Infrastructure stocks, all of which are currently at fresh all-time highs.
The team has analyzed Sensex 5-year and 10-year rolling CAGR data since its inception.
We are coming off a sensational 5-year CAGR of 19% to 20% that coincided with the COVID bottom. Currently, the 10-year CAGR stands at 14.1% and the 5-year CAGR has moderated to 11.8%. These two lines are now intersecting. It is vital to maintain a 10-year perspective as long-term returns remain healthy. Small caps show a similar trend where the 5-year CAGR has dropped from a peak of 35% to 19.9%, while the 10-year CAGR is at 13.5%.
Investors should not be surprised if these figures continue to normalize and should allow the market to digest previous excesses.
Market Overview
In today’s specific market movements, Nifty 50 rose 0.7% and is trending positively above its 50 and 200-day moving averages.
Nifty Next 50
Nifty Next 50 gained 1.06% and is very close to crossing key resistance levels after four consecutive green sessions.
Nifty Mid and Small Cap
The Nifty Mid Cap Index established a new all-time high at 22,579. The Small Cap index rose 0.7%, crossing its 50-day moving average for the first time since mid-November.
Bank Nifty
Bank Nifty gained 0.74%.
GOLD
Gold rose 2% and Silver jumped 4.2% despite previous selling pressure.
SILVER
Advance Decline Ratio
Market breadth was healthy with 373 advances and 127 declines.
Heat Maps
The Nifty heatmap showed Coal India as a top performer with a 7% gain, followed by NTPC at 4.7%. On the losing side, ITC dropped 3.7% and Nestle fell 1.18%.
Mover Of The Day
IDBI Bank was the mover of the day, rising 10.5% on the back of disinvestment progress.
Sectoral Overview
Sectorally, CPSE was the best performer today, up 3.07%, driven by gains in SJVN, Coal India, NHPC, and NTPC. On a weekly basis, almost every sector except FMCG and IT stayed in the green. Monthly data shows Metals as the strongest sector and FMCG as the weakest.
Sector of the Day
Nifty CPSE Index
U.S. Market
Global markets had a muted start to the year. With January 1st being a holiday, the weekly performance for US markets showed small caps losing 2.07%, with the Nasdaq and S&P 500 also facing pressure. Tesla lost 7% and Palantir dropped 8% over the week. Despite this, the Dow Jones remains up 1.2% on a one-month basis. Even though the end of the year usually brings quiet trading, some negative performance was noted across major US indices.
Tweet Of The Day
As 2026 begins, it is a perfect time to reflect on financial goals and the power of compounding. While compounding is easy to calculate in an Excel sheet, it is harder to practice in real life because simple processes are often the most difficult to maintain. A journey from zero to a significant milestone, such as 100k or 1 crore, takes time. For example, reaching the first 100k might take nearly 8 years, but subsequent milestones are reached much faster—eventually taking only a year and a half. This acceleration is the true power of staying invested.
Building wealth can feel like a lonely or intimidating journey, especially when doubting if major milestones are achievable. It is important to celebrate every small milestone conquered along the way. Very few people truly participate in the full journey of compounding, which is often called the eighth wonder of the world. Along with other resolutions for 2026, we encourage you to set solid financial resolutions. The best time to start was yesterday, but the second best time is today.
