Indian equity markets are positioned for a robust start to the week, with Gift Nifty trading at 26,550 indicating the Nifty could surge over 100 points at opening. This bullish momentum is supported by a sharp rally across Asian markets and falling crude oil prices following US-led regime changes in Venezuela, which analysts expect will benefit import-dependent economies like India.

Asian Markets Drive Global Sentiment

Asian markets have posted exceptional gains in early Monday trading, with both the KOSPI and Nikkei surging over 2.00%. This rally is driven by renewed optimism around artificial intelligence, technology-led buying, and improved global risk appetite. Ponmudi R, CEO of Enrich Money, notes that with the Nifty having scaled record highs last week, this positive global momentum strengthens the case for continued upside in both the Nifty and Sensex.

Key market drivers include:

Technical Outlook Remains Constructive

The Nifty's recent breakout from a five-week consolidation range of 25,700-26,300 continues to support bullish momentum. Technical experts from ICICI Securities highlight that the index is trading above key moving averages with strengthening momentum indicators, making market dips attractive buying opportunities as long as support above 26,000 is maintained.

Current technical parameters show:

Derivatives Data Supports Bullish Bias

Derivatives trading on the NSE presents a compelling bullish outlook, according to Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities. Put writers have added fresh positions at at-the-money and nearby strikes, creating a solid support base and limiting downside risks. Meanwhile, call writers have significantly unwound their earlier positions and shifted exposure to higher strikes, indicating expectations for continued upside.

The derivatives setup shows:

Earnings Season and Data-Heavy Week Ahead

Ajit Mishra from Religare Broking notes that the coming week will be data-heavy as markets enter the early phase of earnings season. Domestically, investors will track final readings of HSBC Services PMI and Composite PMI, followed by GDP growth data. Bank loan growth, deposit growth, and foreign exchange reserves data will provide insights into credit demand and liquidity conditions.

JM Financial reports that 28.00% of Nifty companies experienced cuts in FY27E EPS estimates during December, with pharmaceuticals, consumer goods, banks, metals & mining, infrastructure & ports, and oil & gas being key contributors. Notable EPS cuts affected Interglobe Aviation, Eternal, SBI, Shriram Finance, and ONGC, while upgrades benefited Kotak Bank, ICICI Bank, Bharat Electronics, Trent, and Grasim.

Sectoral Opportunities and Risk Factors

If the rally continues, analysts expect it to favor automobiles on demand revival, metals supported by China-related optimism and US rate-cut expectations, financials driven by liquidity participation, and IT/technology aligned with the global AI and semiconductor cycle. Energy and PSU stocks remain well-supported by policy tailwinds and domestic growth visibility.

However, analysts caution that volatility could increase if global instability rises, and valuations combined with intermittent FII outflows may cap near-term exuberance, though the broader trend remains constructive.

Indian stock markets are poised for a data-heavy week as investors focus on macroeconomic announcements, global trends, and foreign investment flows. The Nifty 50 hit a fresh all-time high of 26,340 on Friday, with the benchmark gaining 286.25 points or 1.09% for the week, while the BSE Sensex jumped 720.56 points or 0.84%.

Key Market Drivers This Week

Analysts expect multiple factors to influence market sentiment as 2026 unfolds. Ajit Mishra, Senior Vice President–Research at Religare Broking, highlighted that this week will be data-heavy both domestically and globally as markets enter the early phase of earnings season.

"In India, investors will track the final readings of the HSBC Services PMI and Composite PMI. Globally, key US macro data and releases from China will be closely watched for signals on growth, demand, and inflation trends," Mishra said.

Technical Outlook and Market Structure

The market structure remains firmly positive as 2026 begins. Pravesh Gour, Senior Technical Analyst at Swastika Investmart, noted that while January has historically been a month of consolidation or bearishness, the current momentum suggests a decisive break from this seasonal trend.

Rupak De, Senior Technical Analyst at LKP Securities, sees a favorable chart structure for Nifty, with the index breaking above its previous swing high and reinforcing a positive trend bias. The bullish crossover of the 20-day and 50-day EMAs strengthens the upward structure.

Earnings Season and Corporate Updates

The Q3 earnings season officially begins January 12 with TCS and HCL Technologies announcing results. Ponmudi R, CEO of Enrich Money, expects traders to build positions selectively ahead of results from key index heavyweights.

"Market's focus is set to shift toward the Q3 earnings season, with traders likely to build positions selectively ahead of results from key index heavyweights. Services and Composite PMI data will provide further insights into business momentum and employment trends," Ponmudi said.

Bharat Coking Coal Limited (BCCL) will open its ₹1,300 crores IPO for subscription on Friday, January 8, closing on January 13.

Global Factors and FII Activity

Global attention will focus on US non-farm payrolls and unemployment data, which could shape Federal Reserve rate path expectations and overall risk appetite. Foreign Institutional Investors turned buyers on Friday, purchasing equities worth ₹289.80 crores after being net sellers in recent sessions.

Ravi Singh, Chief Research Officer at Master Capital Services, emphasized that while global cues including US interest rates, currency movements, and geopolitical developments will influence short-term sentiment, domestic fundamentals are increasingly the primary driver for Indian markets.

"The outlook for Indian markets this week appears constructively positioned as markets enter 2026 with focus on domestic growth momentum and global economic health shaping investor sentiment for the year ahead," Singh said.

Currency and Commodity Watch

Investors will closely monitor the rupee's movement against the US dollar and Brent crude prices. The rupee recently slipped below the 90-mark, settling at 90.20 against the dollar, weighed down by a strengthening greenback and persistent foreign fund outflows.

Vinod Nair, Head of Research at Geojit Investments, expects overall sentiment to remain constructive, though markets may move within a steady range as participants await clearer earnings-led triggers and clarity on India-US trade developments.