New-Year Rally Ahead? Why January Could Bring Stability & Fresh Upside Opportunities Across Key

Dharmesh Kant, Head of Equity Research at Chola Securities, says the market appears strong at headline levels but participation is narrow, with pressure in mid- and small-caps despite decent earnings. He attributes current volatility largely to FII rebalancing flows, expecting more stability from January. Earnings outside Nifty 50 grew around 20–21% excluding IT, supported by favourable tailwinds like tax cuts and low inflation. Banking and NBFCs showed growth in retail, home and vehicle loans, though profitability was hit by treasury provisions. Defence continues to outperform with strong book-to-bill ratios, while pharma and speciality chemicals delivered positive surprises aided by currency depreciation. Autos also remain resilient.