The Nifty achieved a fresh milestone by touching a record high of 26,373.20 during Monday's session but failed to sustain the momentum, closing lower at 26,250.30, down 78.25 points or 0.30%. The BSE Sensex also hit an all-time high of 85,883.50 before settling at 85,439.60, declining 322.40 points or 0.40%.

Market Performance Amid Global Rally

Despite upbeat cues from Asian markets, Indian indices struggled to hold gains. Asian markets rallied strongly, with Taiwan surging 2.60%, South Korea advancing significantly, and Japan climbing 3.00%. China added 1.40% while Hong Kong ended marginally higher. However, Indian markets witnessed profit-taking at higher levels after the record-breaking session.

Sectoral Performance and Key Movers

The Nifty IT index emerged as the biggest sector loser, declining 1.40%. HCL Technologies and Infosys dropped over 2.00% each. HDFC Bank's 2.30% decline contributed significantly to the index fall, continuing concerns despite strong business updates. Broader market performance remained mixed, with 1,672 stocks advancing and 2,603 declining out of 4,471 traded on the BSE.

Strong Q3 Business Updates Across Sectors

Despite market volatility, most third-quarter business updates demonstrated robust fundamentals:

Technical Outlook and Key Levels

Analysts maintain a bullish outlook despite Monday's decline. Nilesh Jain of Centrum Broking expects the Nifty to rise to 26,800 levels, emphasizing that the undertone remains positive. The Volatility Index (VIX) climbed 6.10% to 10.02, up from an all-time low of 9.00, making the pullback anticipated.

Market Flows and Geopolitical Factors

Foreign Portfolio Investors sold shares worth ₹36.30 crores on Monday, while domestic institutions bought ₹1,764.07 crores. FPIs have offloaded ₹3,077.10 crores in January so far. Gaurav Sharma of Globe Capital noted that markets did not react significantly to US-Venezuela geopolitical concerns as crude oil prices remained stable, with Brent crude futures rising just 0.40% to $61.10 per barrel.

Defence stocks continued their strong rally as market expert Gurmeet Chadha declared defence "the biggest theme of the decade" amid escalating US-Venezuela tensions. The sector demonstrated robust performance following the United States' launch of "Operation Absolute Resolve," a large-scale military operation that resulted in the capture of Venezuelan President Nicolás Maduro on drug-trafficking charges.

Expert Analysis on Defence Sector Outlook

Gurmeet Chadha, Managing Partner and Chief Investment Officer at Complete Circle Consultants, emphasized that military power and advanced defence capabilities represent a nation's true strength, surpassing traditional metrics like oil reserves or forex stockpiles. Taking to social media platform X, Chadha stated: "The biggest strength is not oil reserves, natural resources, export competitiveness, forex reserves... Its military power & advanced defence capabilities to protect sovereignty, business interests & your dignity."

Chadha's commentary highlights the structural significance of the defence sector as both global and domestic forces align in its favour, particularly in an era where territorial sovereignty, trade interests, and energy routes face increasing contestation.

Market Performance Analysis

The Nifty India Defence index gained 2.03% as of 1:45 PM on Monday, reflecting sustained investor interest across key constituents:

Geopolitical Catalyst Impact

The rally was triggered by Operation Absolute Resolve, involving targeted airstrikes across Venezuela and the capture of President Maduro and the First Lady. This military action followed months of economic sanctions and diplomatic isolation, with Trump stating the US would "run the country" and sell significant quantities of Venezuelan oil to other nations.

The operation marks a significant escalation in US-Venezuela relations and has intensified perceptions of an extended geopolitical crisis, driving investors toward defence-related equities.

Sector Investment Thesis

The broad-based rally across defence sub-segments demonstrates the sector's sensitivity to global developments and its role as a beneficiary during periods of international tension. Market participants have increased exposure to defence-linked equities, reflecting expectations of elevated global defence spending amid sustained geopolitical uncertainty.

The defence sector continues attracting investor interest both as a thematic play during geopolitical uncertainty and as beneficiaries of sustained worldwide military spending trends, supporting Chadha's thesis of defence being the decade's biggest investment theme.