Highs Hit, Broader Participation Missed

Indian benchmark indices finally reclaimed new record highs after a gap of nearly 14 months, although the gains were marginal. The market’s initial optimism proved short-lived, as the indices retreated soon after touching fresh peaks, reflecting quick profit booking and hesitation among investors to chase valuations higher. Over the fortnight, the BSE Sensex and Nifty 50 delivered modest returns of about half a per cent, indicating that sentiment remained cautious despite the benchmark records.[EasyDNNnews:PaidContentStart]

In contrast, the broader market continued to lag behind. Both the BSE Mid-Cap and BSE Small-Cap indices are still trading nearly 8-10 per cent below their historic highs, signalling the need for a meaningful catalyst to revive momentum in these segments. Interestingly, this subdued market behaviour came at a time when the Nifty VIX fell sharply by around 25 per cent, normally an indicator of improving confidence. The divergence suggests that while overall fear has receded, investor optimism remains selective and concentrated in a few pockets.

Record levels made a comeback, but the rally’s narrow breadth revealed a market still searching for conviction.

Sector trends reinforced this view. Large-Cap stocks in information technology, metals and automobiles extended their gains through the fortnight, supported by stable earnings visibility and improving demand indicators. Meanwhile, oil and gas, power and Real Estate names continued to correct as investors booked profits in sectors that had earlier seen strong rallies. The BSE Information Technology Index stood out as the top performer with gains of over 4 per cent. The sustained uptrend in IT stocks indicates rising expectations of a supportive global environment, steady order pipelines and margin benefits from currency trends.One of the key developments during the period was the sharp fall in shares of InterGlobe Aviation (IndiGo), a Nifty 50 constituent, which slumped by more than 8 per cent. IndiGo has cancelled several thousand flights since December 2, leaving passengers stranded at airports nationwide. The disruption stems from an acute pilot shortage after the airline struggled to adjust to the government’s revised pilot duty and rest regulations introduced last year.

Macro indicators continued to draw attention as well. India reported an impressive Gross Domestic Product growth rate of 8.2 per cent for the second quarter of FY26, prompting speculation on the Reserve Bank of India’s policy course. The central bank eventually cut the repo rate to 5.25 per cent while maintaining a neutral stance, signalling flexibility for further adjustments if required.

In other developments, the rupee continued to weaken, slipping past the 90-per-dollar level as foreign portfolio outflows persisted. Foreign institutional investors remained net sellers, pulling out more than ₹14,000 crore from equities, whereas domestic institutional investors offered strong counterbalance with inflows exceeding ₹42,000 crore. The combined trends reflect a market standing at an interesting crossroads as investors weigh strong economic indicators against pockets of volatility. Stay tuned for further updates!

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