Sensex and Nifty: Recovery After Early Weakness

The Sensex opened the day sharply lower by 487.07 points, weighed down by profit-taking and global cues, but staged a robust recovery, gaining 605.62 points from the intraday low to close near the day’s highs. The index remains 2.74% below its 52-week high of 86,159.02, indicating some room for upside momentum. However, the Sensex is still trading below its 50-day moving average (DMA), which itself is positioned above the 200-DMA, signalling a mixed technical setup with potential for consolidation in the near term.

The Nifty mirrored this trend, with a modest gain reflecting the cautious optimism prevailing among investors ahead of key corporate earnings scheduled next week.

Sectoral Performance: Utilities Shine, IT Faces Sharp Decline

Out of 38 sectors tracked, 32 advanced while 6 declined, underscoring broad market participation. The S&P BSE Utilities sector emerged as the top performer, surging 2.65% on the back of strong buying interest in power and infrastructure stocks. This sector’s outperformance was a key driver behind the Sensex’s recovery, with Adani Power leading large-cap gainers, rallying 7.66% amid positive sentiment around power generation and distribution.

Conversely, the Nifty IT sector was the worst performer, plunging 5.94% as investors booked profits and reacted to mixed global technology cues. Major IT stocks such as Infosys declined sharply by 6.95%, while mid-cap IT names like Coforge fell 5.78%, reflecting sector-wide weakness. This drag on the index was a significant factor limiting broader market gains.

Market Capitalisation Trends: Large Caps Lead, Mid and Small Caps Lag

Large-cap stocks led the market’s modest advance, with the BSE100 index rising 0.28%. In contrast, mid-cap and small-cap segments underperformed, with the BSE Midcap index falling 1.59% and the BSE Smallcap index declining 3.3%. This divergence suggests investors are favouring the relative safety of large, blue-chip companies amid ongoing global uncertainties and ahead of upcoming earnings announcements.

Top Gainers and Losers: Volatility Evident Across Market Caps

Among the BSE500 constituents, Sheela Foam was the top gainer, soaring 15.61% on strong volume and positive outlook for the consumer durables sector. BLS International and Lloyds Metals also posted robust gains of 13.09% and 9.24% respectively, reflecting sector-specific optimism in logistics and metals.

On the downside, eClerx Services led the losers with a 9.08% decline, followed by Sai Life Sciences and Latent View, which fell 7.74% and 7.55% respectively. These losses were concentrated in IT and pharma-related stocks, sectors currently facing profit-taking and valuation concerns.

Market Breadth and Investor Activity

The advance-decline ratio across the BSE500 stood at a healthy 1.91x, with 327 stocks advancing against 171 declining. This positive breadth indicates that despite sectoral divergences, the broader market maintained underlying strength. Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) activity data for the day is yet to be fully disclosed, but the cautious recovery suggests a balanced approach with selective buying in defensive sectors.

Large, Mid and Small Cap Movers: Divergent Trends

Large caps traded largely flat with notable exceptions. Adani Power’s 7.66% gain was the standout, driven by sector tailwinds and positive investor sentiment. Infosys, however, was the largest large-cap laggard, dropping 6.95% amid sector-wide IT weakness.

In the mid-cap space, Lloyds Metals gained 9.24%, reflecting renewed interest in metals amid global commodity price stability. Conversely, Coforge declined 5.78%, weighed down by profit-booking and cautious outlook on IT services demand.

Small caps experienced heightened volatility, with Faze Three surging 20.00%, possibly on speculative buying or positive corporate developments. Timex Group, however, fell sharply by 9.99%, highlighting the riskier nature of this segment in the current environment.

Global Cues and Upcoming Corporate Earnings

Global markets remained subdued amid mixed economic data and geopolitical concerns, which initially pressured Indian equities. However, the domestic market’s recovery was supported by resilient macroeconomic indicators and expectations of steady corporate earnings growth.

Investors are now turning their focus to key upcoming results, including Bharti Airtel and Tata Motors Passenger Vehicles, both scheduled for 5 February 2026, alongside Power Finance Corporation. These earnings announcements are expected to provide fresh direction for the market, especially in the telecom, automobile, and financial sectors.

Technical Outlook and Market Sentiment

From a technical perspective, the Sensex’s recovery after an early dip suggests resilience, but the index’s position below the 50-DMA indicates that investors remain cautious. The 50-DMA trading above the 200-DMA is a positive medium-term signal, but the market may consolidate near current levels until clearer earnings visibility emerges.

Sector rotation towards defensive areas such as utilities and power, coupled with profit-taking in IT and small caps, reflects a risk-averse stance among investors. This cautious optimism is likely to persist in the near term, with market participants closely monitoring global developments and domestic corporate results.

Conclusion

In summary, the Indian equity market on 4 February 2026 demonstrated a tentative recovery after early weakness, led by utilities and select large caps. The mixed performance across sectors and market capitalisation segments highlights the ongoing uncertainty and selective buying patterns. With key earnings announcements on the horizon and global cues remaining volatile, investors are advised to maintain a balanced approach, favouring quality large caps and defensive sectors while monitoring mid and small-cap volatility closely.

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