Published on: 2026-01-05
Indian markets began 2026 with steady gains as the Nifty hit new highs. Leadership shifted among heavyweight stocks, driven by strong business updates, firm commodity prices, and selective buying in key index names.
Market breadth was uneven. Banking and resource stocks showed strength on domestic credit growth and commodity tailwinds. IT stocks lagged due to weak demand.
This split creates sector opportunities for investors focusing on earnings resilience, commodity upside, and policy-sensitive areas.
Indian equity markets started 2026 steady but cautious, driven by domestic optimism and lingering global uncertainties.
Benchmark indices traded near record levels, supported by steady domestic inflows, resilient consumption data, and selective buying in heavyweight stocks. Financials and power stocks provided stability, while metals attracted momentum-driven interest as global commodity prices firmed.
Sector divergence stayed sharp. IT stocks faced pressure from weak overseas demand and cautious deal pipelines, prompting profit-taking after recent gains.
Overall market sentiment remained range-bound, with investors favouring stock-specific catalysts over broad index bets. Capital allocation is being guided by earnings visibility, commodity trends, and near-term business outlooks rather than aggressive directional positioning.
Note: “Best stocks to watch” varies daily based on earnings, macro news, global markets, flows, and technical triggers. Always check current prices, valuations, and outlook before making investment decisions.
| # | Company (Ticker) | Sector | Near-term Catalyst | Risk |
|---|---|---|---|---|
| 1 | Reliance Industries (RIL) | Energy / Digital | Retail metrics / oil GRMs | Index correlation |
| 2 | Bajaj Finance (BAJFINANCE) | NBFC | Asset quality & earnings cadence | Cyclical credit risk |
| 3 | HCLTech (HCLTECH) | IT services | Deal wins / US demand | Offshore demand shock |
| 4 | LTIMindtree (LTIM) | IT services | Order book updates | Execution risk |
| 5 | Avenue Supermarts (DMART) | Retail | Same-store-sales / margins | Consumer slowdown |
| 6 | Hindustan Zinc (HINDZINC) | Metals | Zinc price / production | Commodity swings |
| 7 | Vedanta (VEDL) | Metals & Energy | Commodity cycle / deleveraging | Volatile commodity exposure |
| 8 | Hindustan Copper (HINDCOPPER) | Copper mining | LME copper price | Single-commodity risk |
| 9 | FSN E-Commerce (NYKAA) | E-commerce / Retail | Q3 update / GMV growth | Competitive retail margins |
| 10 | NTPC (NTPC) | Power | Fuel costs / policy | Regulatory / fuel risk |
(Table reflects the news-driven selection and catalysts as at market open on 5 January 2026.)
Why watch: As of January 2026, Reliance remains the market’s most influential index stock, trading near record levels on steady execution across retail, digital, and energy businesses. High-teens retail growth, over 450 million Jio subscribers, and stabilising petrochemical margins continue to support sentiment, with near-term moves tied to retail metrics, telecom trends, and crude-linked GRMs.
Risk: High index-correlation; market-wide selloffs hit RIL hard.
Why watch: Sustained retail credit growth, with assets under management expanding in the mid-20% range year-on-year, and consistently strong collection efficiency (above 99%) position Bajaj Finance to capitalise on resilient consumer demand. Clear earnings visibility, disciplined underwriting, and the potential for modest margin expansion as funding costs stabilise continue to keep the stock firmly in focus.
Watch for: Margin stability in Q3 commentary and incremental portfolio quality metrics.
Why watch: IT stocks have faced sustained pressure in 2026 due to cautious global demand and sector downgrades, creating selective opportunities within the space. HCLTech stands out for its relatively stable deal pipeline and margin levers, which could support performance even in a softer spending environment.
Watch for: Commentary on U.S. demand and deal wins; short-term volatility is likely.
Why watch: LTIMindtree is in focus as investors closely track earnings delivery and order-book traction following industry consolidation. Clear execution, margin stability, or meaningful deal wins could prompt a swift re-rating despite the broader caution around IT spending.
Watch for: Order-book disclosures and client vertical traction.
Why watch: Consumer retail stocks remain in focus following strong festive-season footfalls and faster inventory churn during Q3 updates. DMart continues to stand out as a core consumption play, delivering mid- to high-teens year-on-year revenue growth, supported by consistent store additions, strong inventory turnover, and disciplined cost control.
Watch for: Same-store-sales commentary and gross margin signals.
Why watch: Renewed strength in base metal prices has brought commodity stocks back into focus, and Hindustan Zinc stands out for its direct leverage to zinc prices and strong cash-generation profile. High dividend visibility continues to underpin investor interest during commodity upcycles.
Watch for: LME zinc moves and company-specific production/realisation updates.
Why watch: Vedanta attracts attention when improving commodity cycles coincide with progress on balance-sheet management. Recent strength in base metals and oil-linked businesses has kept the stock in focus as a higher-beta play on commodity momentum.
Watch for: Commodity price direction and any corporate-deleveraging commentary.
Why watch: Shares surged in recent sessions on rising LME copper and company-specific optimism; intraday strength marked Hindustan Copper as a short-term momentum play in 2026.
Risk: Commodity volatility and single-commodity exposure.
Why watch: Nykaa’s Q3 business update highlighted continued strength in the Beauty segment and a gradual recovery in Fashion, improving confidence in growth and margin trajectories. The update triggered renewed buying interest as investors reassessed the company’s medium-term execution and profitability outlook.
Watch for: Margin commentary and GMV/retail footfall metrics.
Why watch: Power stocks such as NTPC tend to act as defensive anchors during sector rotations, supported by predictable cash flows and strong policy visibility. The company’s regulated earnings profile and scale make it a consistent focus when investors seek stability amid market churn.
Watch for: Coal linkages, tariff updates, and policy announcements.
Traders: Use these stocks for earnings- or news-driven trades, aligning position size with clearly defined stop-loss levels near key technical supports or resistances. Time horizons should match the catalyst, typically ranging from one to ten trading sessions for event-based moves.
Short-term investors (weeks to months): Prioritise companies with improving earnings visibility or near-term re-rating potential, such as Bajaj Finance and Reliance, as well as select commodity-linked stocks like Hindustan Zinc and Vedanta when the macro and pricing environment is supportive.
Long-term investors: Stay focused on business fundamentals rather than short-term market fluctuations. Use market pullbacks in established leaders such as Reliance, Bajaj Finance, and DMart to build positions gradually, but only after reassessing valuations, competitive positioning, and long-term growth drivers.
In early 2026, markets are being driven by uneven global growth signals and domestic resilience, leading to clear sector rotation rather than broad-based rallies. Investors are favouring areas with earnings visibility and pricing power, while sectors exposed to global demand cycles are seeing more selective participation.
Sectors with greater exposure to overseas demand are experiencing volatility amid cautious global spending, currency movements, and shifting interest-rate expectations. This environment compresses near-term visibility but also creates opportunities for companies with strong order books, cost controls, or niche strengths.
Commodity-linked stocks tend to perform well when global prices and demand trends are supportive, but they remain inherently cyclical. In 2026, selective opportunities exist, though investors must manage risk carefully given the potential for sharp reversals driven by global macro or supply-side developments.
Stocks at or near record levels often reflect strong fundamentals, but future returns depend on whether earnings growth continues to justify valuations. Investors should focus on the sustainability of margins, balance-sheet strength, and long-term competitive positioning rather than extrapolating recent price momentum.
Among the top ten Indian stocks to watch today, the most critical name is the one with the greatest influence on index direction and market sentiment, given its size, liquidity, and diversified earnings base. Its performance often sets the tone for broader market moves, making it a key reference point for both traders and long-term investors.
Today’s actionable shortlist combines index heavyweights such as Reliance and Bajaj Finance, news-driven momentum stocks, and commodity or defensive plays positioned to benefit from specific macro or pricing trends.
Align stock selection with your investment horizon: trade clearly defined news or earnings catalysts, build exposure to high-quality businesses for medium-term positions, and maintain disciplined position sizing in areas exposed to commodity swings or macro volatility.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment, or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.
