Following a week of consolidation, Indian equity markets are expected to remain volatile during the January 19–23 period, with the Q3 earnings performance of index heavyweights and evolving global and domestic factors likely to set the market tone. Analysts said investor sentiment will hinge on the pace of earnings announcements, foreign fund flows, developments around the India–US trade deal, and trends in crude oil prices amid ongoing geopolitical tensions.

Last week, the Nifty 50 ended almost flat at 25,694.35, up 0.04%, while the BSE Sensex closed at 83,570.35. Gains on Friday, led by strong IT earnings, were offset by continued FII outflows, global uncertainties, and mixed macro cues.

Broader markets showed relative resilience, with the Nifty Midcap 100 and Smallcap 100 rising 0.20% and 0.46%, respectively, indicating selective buying beyond large caps. IT stocks outperformed, while pharma and consumer durables remained under pressure.

Key events to watch

The upcoming week is expected to be data-heavy and crucial for short-term market direction, said Ajit Mishra, SVP–Research, Religare Broking. “Participants will initially react to earnings from key heavyweights such as Reliance Industries, HDFC Bank and ICICI Bank. Thereafter, focus will shift to a broader set of Q3 results from several large- and mid-cap companies across sectors,” he said. Key domestic releases include PMI readings for manufacturing, services and the composite index. Investors will also track data on bank credit growth, deposit growth and foreign exchange reserves.

On the global front, US macroeconomic data—including GDP growth, inflation trends, jobless claims and PMI readings—will influence risk sentiment and currency movements. Geopolitical developments and updates on trade negotiations will also remain in focus, Mishra added.

Q3 results to watch

Key Q3 earnings to watch include major Indian companies such as BHEL, IndiGo, Kotak Mahindra Bank, BPCL and Adani Green, with investor focus on demand trends, cost pressures and management outlook for the remainder of FY26.

According to Ponmudi R, CEO of Enrich Money, banking stocks will be in the spotlight as investors react to quarterly results from heavyweights such as ICICI Bank and HDFC Bank, along with lenders like IDBI Bank, RBL Bank and YES Bank.

FIIs continue selling

Sustained selling by foreign institutional investors (FIIs) persisted during the week ended January 16, with total outflows for January so far at ₹22,529 crore. FIIs were net sellers on all days this month except one.

The underperformance of Indian equities compared with other major global markets has extended into early 2026, with the Nifty delivering a year-to-date return of -1.73%, said V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that FII selling is likely to continue until positive triggers for a sustained rally emerge. Weak earnings growth, elevated valuations and uncertainty around the India–US trade agreement have also weighed on sentiment, he added.

Technical outlook

After hitting a record high of 26,373, the Nifty has entered a mild corrective phase but remains well supported near its 100-day EMA, indicating consolidation rather than panic selling, said Sudeep Shah, Head–Technical and Derivatives Research at SBI Securities. A breakout above 25,950 could revive upside toward 26,200–26,500, while a break below 25,450 may deepen the correction.

The Sensex remains range-bound near its 100-day EMA. A decisive move above 84,500 could trigger a recovery toward 85,100–85,600, while a break below 82,800 may invite further downside. Meanwhile, Bank Nifty continues to outperform; a close above 60,500 could push it toward 61,200–62,000, with support at 59,300–59,400. Q3 results from HDFC Bank and ICICI Bank will be key triggers.

Strategy ahead

Given the mixed domestic and global backdrop and persistent FII outflows, experts advise prudent position sizing and controlled leverage. A decisive breakout from the current consolidation range in the Nifty will offer clearer cues on the next directional move. Investors may focus on quality large caps and select larger midcaps with better earnings visibility and institutional interest—such as IT, metals and select PSU stocks—while keeping exposure to rate-sensitive sectors like realty and capital goods limited, said analyst at Religare Broking.

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