Nifty, Sensex extend weekly gains despite FII outflows; volatility rises on global cues

Indian equity benchmarks extended their gains for a second straight week, supported by firm Q2 earnings, easing inflation and renewed optimism around the India–US trade negotiations. The undertone remained positive despite persistent FII outflows.

What drove the market this week?

Indian equity markets logged a second consecutive week of gains, with Nifty and Sensex edging higher despite persistent foreign investor outflows and patchy global sentiment. The Nifty closed the week 0.68 per cent up at 26,068, while the Sensex added 0.50 per cent to finish at 85,231. Analysts said stronger-than-expected Q2 FY26 earnings, easing inflation and growing optimism around India–US trade talks supported sentiment. The moderation in FII selling, driven partly by expectations of earnings upgrades in the second half of FY26, also cushioned volatility through the week.

Broader markets lag benchmark indices

While the headline indices held firm, broader markets underperformed. The Nifty Midcap100 slipped 0.76 per cent and the Smallcap100 fell 2.2 per cent for the week, signalling selective profit booking after an extended rally. Markets turned volatile on Friday as global cues weakened, with the Nifty pulling back after failing to break its previous all-time high of 26,277.

Sectoral trends were mixed. IT stocks, despite pressure from weakness in US tech shares, emerged as the biggest weekly gainers. Auto and Services indices also ended in positive territory. Metals and realty stocks were the worst hit on Friday, both declining more than 2 per cent, followed by PSU banks and financials.

Global headwinds weigh on sentiment

Stronger US payroll data dented expectations of a December Fed rate cut, pressuring global markets. Gold eased and the rupee weakened to a new low. Crude oil declined as the US renewed its push for a Russia–Ukraine peace proposal, easing supply concerns.