Nifty, Sensex Rally On; Indices Notch Second Week of Gains Despite FII Outflows

India’s stock market benchmarks extended their gains for a second consecutive week, fueled by robust Q2 corporate earnings, cooling inflation, and optimism surrounding India-US trade discussions.

The Nifty and Sensex indices climbed 0.68% and 0.50% respectively during the week, closing at 26,068 and 85,231.

Market experts noted reduced foreign institutional investor (FII) selling pressure, driven by anticipated earnings upgrades in the latter half of FY26. Trading turned volatile on Friday as global markets weakened, with the Nifty retreating after testing its all-time peak of 26,277.

Midcap and smallcap stocks lagged behind, with the Nifty Midcap100 and Smallcap100 indices declining 0.76% and 2.2% during the week.

Despite US tech sector weakness impacting IT stocks, the IT index emerged as the week’s top performer. Auto and services sectors also posted gains. Friday’s session saw sharp declines in metal and realty stocks (both down over 2%), followed by PSU banks, financial services, and media companies.

Strong US employment data dampened expectations for a December Federal Reserve rate cut, weighing on global equities. Gold prices retreated while the Indian rupee touched fresh lows against the dollar.

Crude oil prices softened after Washington renewed diplomatic efforts to resolve the Russia-Ukraine conflict.

“Persistent rupee volatility may trigger short-term profit booking. Market direction next week will hinge on trade developments and key economic indicators, including IIP figures and Q2 FY26 GDP data,” stated Vinod Nair, Head of Research at Geojit Financial Services.

Analysts anticipate market resilience in the coming week, citing dip-buying opportunities, improved Q3 demand forecasts, and stable capital flows.

(With inputs from IANS)