WEEKLY MARKET RESEARCH REPORT 5-9 Jan 2026 | Scrolls

by Karnivesh |2026

WEEKLY MARKET RESEARCH REPORT 5-9 jan 2026.pdf

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The week of January 5–9, 2026 marked a clear turning point for Indian equity markets. What began as a continuation of record-high momentum quickly transformed into a phase of correction and recalibration. After touching all-time highs just days earlier, markets paused to reassess valuations, earnings visibility, and external risks that had quietly been building beneath the surface.

The correction was sharp but orderly. The Nifty 50 declined 2.45% over the week, while broader indices fell more steeply, signaling a classic risk-off move rather than a sector-specific breakdown. Investor sentiment shifted from chasing momentum to preserving capital, driven by a combination of global uncertainty, policy concerns, and earnings season anxiety.

At the heart of the sell-off was rising unease around potential US tariff actions. Export-oriented sectors particularly information technology, pharmaceuticals, automobiles, and metals came under pressure as markets began factoring in the risk of earnings disruptions. This uncertainty was compounded by anticipation ahead of key IT earnings announcements, where expectations around AI-led growth and margin sustainability appeared increasingly demanding.

The IT sector faced the sharpest scrutiny. Despite strong business models and structural advantages, valuation fatigue and policy uncertainty triggered profit-taking. Investors appeared unwilling to pay premium multiples without clearer near-term visibility, even for high-quality names. Similar caution extended to pharmaceuticals, where tariff exposure overshadowed supportive currency movements and long-term demand fundamentals.

Banking stocks, while not immune, demonstrated relative resilience. Large private banks absorbed selling pressure better than the broader market, supported by improving credit growth outlooks and reasonable valuations. Importantly, this sector attracted steady domestic institutional buying, reinforcing its role as a core allocation during periods of volatility.

Cyclical sectors such as metals, power, and automobiles reflected global growth concerns. Weak commodity sentiment, fears of slowing Chinese demand, and export-linked tariff risks weighed on these segments. However, domestic structural drivers—particularly infrastructure spending and energy demand—remained intact, suggesting that price weakness was more sentiment-driven than fundamental.

In contrast, defensive pockets of the market offered stability. FMCG stocks saw comparatively modest declines as investors gravitated toward earnings visibility and consumption resilience. This rotation underscored a broader shift in market behavior from growth at any price toward balance and predictability.

Perhaps the most defining feature of the week was the divergence between domestic and foreign institutional flows. While foreign investors continued to reduce exposure amid global risk aversion, domestic institutions consistently absorbed supply. This counterbalance prevented deeper market damage and highlighted a structural evolution in India’s equity market, where domestic capital increasingly determines market stability.

By the end of the week, volatility had risen, valuations had cooled, and expectations had reset. What emerged was not a broken market, but a market in transition moving from momentum-driven optimism to a more grounded phase where earnings delivery, policy clarity, and valuation discipline matter more than narratives.

The correction served as a reminder that periods of excess enthusiasm often require consolidation. In that sense, the week was less about loss of confidence and more about restoring balance allowing markets to realign with fundamentals before the next phase of growth unfolds.