Market Rally: Defence Stocks Soar 11% & MCX Profit Jumps 151% as Nifty Hits 25,342

Introduction

On Wednesday, January 28, 2026, the Indian equity markets demonstrated remarkable resilience and momentum, closing sharply higher as a confluence of pre-budget optimism and a historic surge in commodity prices energized investors. The Sensex advanced by 487 points (0.60%) to settle at 82,344.68, while the Nifty 50 climbed 167 points (0.66%) to finish the session at 25,342.75. This broad-based buying added approximately ₹2.9 lakh crore to investor wealth, propelling the total market capitalization of BSE-listed companies to a staggering ₹456 lakh crore.

The session was defined by an extraordinary awakening in the defence sector and a "bullion boom" that saw precious metals hit lifetime highs, directly benefiting the country’s premier commodity exchange. For retail investors, the day provided a clear glimpse into the structural transitions currently reshaping the Indian economy—from indigenous defence manufacturing to a fundamental overhaul of corporate labour costs.

Market Snapshot: January 28, 2026

Defence Sector Awakens: Double-Digit Gains Ahead of Budget 2026

The most prominent theme of the trading session was the explosive rally in defence stocks. With the Union Budget 2026 scheduled for February 1, investors aggressively positioned themselves in anticipation of significant capital allocation increases. Several frontline defence companies witnessed double-digit gains, reflecting high-conviction buying.

Sectoral Performance Highlights

Strategic and Fundamental Drivers

This pre-budget euphoria is supported by robust data. Year-to-date (YTD) FY26 defence capex has already surged by 57%, indicating the government’s unwavering commitment to modernization. Leading brokerages, including Jefferies, project that defence capital expenditure could grow between 15-25% from the current base of ₹1.8 lakh crore, potentially reaching 1% of India’s GDP by FY31.

Beyond speculation, fundamental performance provided a solid foundation for the rally. Bharat Electronics (BEL) reported its Q3 results, featuring a 20.4% YoY jump in net profit to ₹1,579 crore, with revenue climbing 24% YoY to ₹7,154 crore. Furthermore, expectations are high for the proposed Drone Shakti Mission, a ₹10,000 crore incentive program designed to establish India as a global manufacturing hub for UAVs and anti-drone systems.

The Labour Code Reckoning: Impact on Corporate Earnings

While indices rose, a structural shift in India’s regulatory landscape—the implementation of new Labour Codes—triggered significant one-time hits to corporate earnings. These codes, which consolidated 29 existing laws into four, came into effect on November 21, 2025.

The core of the impact lies in the redefined "wage" definition, which now mandates that basic pay must constitute at least 50% of the Total Compensation (CTC). This change increases the base for calculating Provident Fund (PF) contributions and gratuity, leading to higher provisioning requirements for companies.

Corporate One-Time Charges (Q3 FY26)

While management teams, including HCLTech CEO C Vijayakumar, have described these as one-time events, the immediate effect has been a compression of margins across the IT and manufacturing sectors. Investors are now closely monitoring whether these increased costs will be offset by long-term productivity gains.

Commodity Exchange Boom: MCX Profit Surges 151%

The Multi Commodity Exchange of India (MCX) emerged as a top performer on Wednesday, reporting a stellar 151% YoY surge in consolidated net profit to ₹401 crore for Q3 FY26. The stock reacted by rallying 4.77% to reach ₹2,391.50.

MCX Key Financial Metrics (Q3 FY26)

• Revenue from Operations: ₹666 Crore (+121% YoY)
• EBITDA Margins: Expanded from 67% to 76%
• Average Daily Turnover (ADT): ₹7.50 Lakh Crore (+224% YoY)
• Options Trading Volume: ₹6.66 Lakh Crore (+227% YoY)

The dramatic increase in volumes was largely driven by the bullion segment (gold and silver), which accounted for 78% of futures turnover. This surge correlates with unprecedented volatility in global precious metals markets.

Record-Breaking Bullion Prices

Silver and gold reached historic levels during the session:

• Silver Futures: Hit a lifetime high of ₹3.83 lakh per kg.
• Gold Prices: Reached ₹1.62 lakh per 10 grams.
• International Context: Comex Gold crossed $5,250/oz, while Silver touched $115.52/oz.

This rally was fueled by a weakening US Dollar, which hit four-year lows following comments from US President Donald Trump regarding dollar competitiveness. Additionally, shifting demand in China—where manufacturers are reportedly pivoting from jewelry to 1kg silver bars—has intensified the supply-demand imbalance.

Metals Renaissance: Hindalco’s ₹21,000 Crore Odisha Strategy

In a massive push for self-reliance in the metals sector, Hindalco Industries announced a ₹21,000 crore expansion of its aluminum smelter at the Aditya Aluminium complex in Sambalpur, Odisha. This expansion adds 3.6 lakh tonnes per annum of capacity.

This move is strategically aimed at reducing India's dependence on imports, as currently, nearly 40% of India's flat-rolled aluminum is sourced from abroad. Hindalco also commissioned a ₹4,500 crore facility for battery-grade aluminum foil, designed to support 100 GWh of lithium-ion cell manufacturing for the EV sector. Total planned capex for Odisha is projected at ₹37,000 crore, expected to generate over 15,000 jobs.

Green Energy Transitions: BESS and Wind Power

The energy transition narrative gained further momentum with major updates from Adani Green and Suzlon:

1. Adani Green Energy (AGEL): The company confirmed its entry into Battery Energy Storage Systems (BESS). It targets 7 GWh of capacity by FY27, with a planned capital expenditure of ₹25,000-40,000 crore. Approximately 3.5 GWh will be commissioned by March 2026 at the Khavda complex in Gujarat.
2. Suzlon Energy: Secured a 248.85 MW wind energy order from the ArcelorMittal Group. This project is part of a larger initiative to provide 1,156 MW of wind capacity specifically for green steel production in India.

Key Takeaways for Investors

• Defence Dominance: The sector is no longer just a budget play; strong earnings from BEL (Profit +20.4%) suggest fundamental growth is catching up with valuations.
• Labour Reform Impact: Retail investors should note that the Q3 earnings dip in many IT and Auto stocks is largely due to one-time statutory provisions rather than a drop in business demand.
• Commodity Leverage: MCX is proving to be a primary beneficiary of global currency volatility, with 76% EBITDA margins reflecting significant operational leverage.
• Metals & EV Synergy: Hindalco’s focus on battery-grade foil highlights the growing intersection between traditional metal industries and the future of electric mobility.
• Liquidity Buffer: The RBI’s scheduled ₹1 trillion OMO bond purchases on January 29 and February 5 are expected to ease banking system liquidity ahead of the Budget.

What This Means for Investors

The market action on January 28 indicates that India is moving away from purely cyclical momentum toward a structural transition phase. For long-term investors, the focus is shifting toward companies that are vertically integrating (like Hindalco) or those benefiting from the "financialization" of commodities (like MCX).

While Foreign Institutional Investors (FIIs) were net sellers of ₹3,068.5 crore today, Domestic Institutional Investors (DIIs) showed immense strength with net buying of ₹8,999.7 crore. This suggests that domestic capital is increasingly setting the floor for Indian valuations.

As we approach the Union Budget on February 1, investors should monitor the fiscal deficit target. Data suggests a target between 4.2-4.4% of GDP. A target toward the higher end (4.4%) might be equity-positive due to higher spending but could cause bond yields to firm up. Monitoring resistance levels for the Nifty at 25,300 will be crucial for the final trading days of January.