Nifty stocks demonstrated strong performance against analyst expectations for the third consecutive year, marking the first such streak in over a decade. This achievement comes despite the benchmark index delivering relatively modest returns compared to several global peers.

Analyst Accuracy Reaches Multi-Year High

Data comparing analyst 12-month consensus price targets as of January 1 with market prices as of December 29 reveals a notable trend. Among the 47 Nifty companies tracked by at least 10 analysts, 29 stocks surpassed estimates while 18 fell short of expectations.

This extends a positive trend that began two years ago, representing a sharp reversal from the previous year when only 10 stocks beat estimates and 38 missed them. The last time analyst hits outnumbered misses for three consecutive years was between 2012 and 2014.

Index Performance Lags Global Peers

Despite the higher hit rate at the individual stock level, index returns remained muted. The NSE Nifty 50 rose approximately 9.70%, significantly lagging gains in several global markets.

Market participants view the improving analyst hit rate as reflecting a shift in market conditions rather than broad-based price momentum. Rahul Singh, Chief Investment Officer for Equities at Tata Asset Management, noted that the Indian market is transitioning from sideways consolidation into a phase of earnings-led optimism, with Nifty valuations having normalised.

Notable Outperformers

Several stocks emerged as major winners, significantly exceeding analyst expectations:

Eicher Motors delivered strong performance driven by record earnings, robust Royal Enfield sales, favorable GST changes, and rising global demand for its products.

Shriram Finance advanced following Mitsubishi UFJ Financial Group's announcement on December 19 to acquire a 20% stake through preferential allotment.

Maruti Suzuki gained on expectations of GST cuts for small cars, improved festive sales, higher exports, and a strategic shift towards SUVs in its product portfolio.

Bajaj Finance rose supported by expectations of GST cuts on consumer durables, which market participants viewed as positive for credit demand.

Significant Underperformers

Several prominent stocks failed to meet analyst expectations:

Tata Motors declined due to weak performance at its Jaguar Land Rover unit, including production disruptions from a cyberattack, weak demand in China and Europe, higher US tariffs, and reduced margin guidance.

Trent fell more than 40% after a 136% rise in the previous year, experiencing its first annual decline in over a decade due to slower revenue growth and weaker demand.

Tata Consultancy Services faced pressure from concerns over global demand outlook, layoffs, restructuring activities, and regulatory risks including the proposed ₹83,00,000 H-1B visa fee.

NTPC declined amid prolonged monsoons, lower air conditioner usage, and subdued industrial production, which collectively reduced power demand.

Market Outlook

Experts anticipate that corporate profit growth will improve in the coming year from the single-digit growth observed in the current year, supported by policy measures that have enhanced consumer sentiment. The improving analyst accuracy suggests a more predictable market environment as India transitions into a new phase of economic growth.

Indian equity markets are experiencing a consolidation phase near key resistance levels, but the broader trend remains constructive according to technical analysis from Angel One. Derivatives Analyst Sneha Seth identifies the current market structure as healthy, with specific levels serving as crucial decision points for future direction.

Technical Outlook: Critical Support and Resistance Zones

The Nifty 50 has encountered resistance near the 26,200 level, primarily attributed to significant call-side positioning and mild profit-booking activities. Seth emphasizes that this pause reflects technical factors rather than fundamental weakness in the market structure.

The 26,000-26,050 zone represents a critical support area, coinciding with the gap created earlier this week and the 20-day moving average. Seth recommends considering long positions with stop-loss near 25,900, expecting limited downside from current levels. A decisive move above 26,200 could trigger significant upside momentum.

Banking Sector: Key Driver for Next Rally Phase

The banking sector, particularly private sector banks, holds the key to the market's next directional move. Banking indices have been trading within a narrow range, creating a consolidation pattern that could determine broader market direction.

Seth notes that buying interest in private sector banks could catalyze a move above 26,200 for the Nifty, maintaining her positive bias contingent on banking sector performance.

Sectoral Analysis: Metals Lead, IT Offers Opportunities

The metals sector continues to demonstrate strong technical structure with sustained momentum. Seth remains bullish on Nifty Metal, projecting continuation toward 11,000-11,500 levels. Specific stocks like Tata Steel and Hindalco appear attractive within this space.

For the IT sector, recent profit-booking is viewed as healthy consolidation rather than a major correction. The 20-day moving average is expected to provide strong support, with dips presenting accumulation opportunities for quality IT stocks.

Stock Recommendations: Specific Targets and Levels

Seth highlights two specific stock opportunities with defined risk-reward parameters:

UPL Analysis:

• Technical strength with higher tops and bottoms formation
• Trading above key moving averages
• Buy recommendation at current levels
• Stop loss: ₹760.00
• Target: ₹804.00

Ola Electric Setup:

• Showing recovery signs after healthy correction
• Fresh long positions recommended
• Stop loss: ₹35.00
• Near-term target: ₹38.00
• Extended upside: ₹40.00-₹42.00

Market Strategy: Constructive Outlook with Selective Approach

The overall market structure remains constructive with limited downside risk as long as key support levels hold. Seth recommends closely tracking banking stocks while using sectoral dips as strategic buying opportunities. The positive bias continues, supported by technical levels and sectoral rotation patterns that favor selective stock picking over broad-based strategies.