The benchmark Sensex and Nifty have been scaling fresh records during intraday trade, but have failed to hold on to those levels. Market experts have cautioned against reading too much into it, suggesting that the trend indicates profit-booking in large-caps, which will continue to drive the headline indices.

On Thursday, the Nifty 50 scaled an all-time high of 26,310.45 and Sensex hit a peak of 86,055.86 during intra-day trading, but both the benchmarks have fallen off these levels. Nifty 50 closed flat at 26,215.55 points and S&P Sensex settled 0.1% higher at 85,720.38 points.

The record closing highs for Nifty and Sensex stand at 26,216.05 and 85836.12, respectively.

“A small red candle was formed on the daily chart with minor upper and lower shadow,” said Nagaraj Shetti, senior technical research analyst at HDFC Securities. Technically, this market action points to a consolidation phase after the recent breakout, he said, adding that it also signals the likelihood of some choppiness in the short term before the next sharp upmove emerges.

He sees immediate support at 26100-26050, and the next upside levels to be watched should be around 26600.

Slipping from the record levels isn’t something to read too much into and does not warrant much concern, according to Ashwani Shami, president and chief portfolio manager at Omniscience Capital. “What we’re seeing is mostly a bout of portfolio repositioning.”

He expects 2026 to be dominated by large caps, with the segment likely to outperform mid- and small-caps. Omniscience Capital’s flexicap fund already has a higher allocation to large caps than to mid- and small-caps.

Solid companies delivering double-digit earnings growth and trading below the 20x price-to-earnings multiple will make compelling investment bets, he said.

The September quarter results of the Nifty 500 companies show that the broader universe continues to struggle with modest revenue growth or over 6% year-on-year, according to a Kotak Institutional Equities report of 26 November. However, Ebitda grew 17% yoy, while profit after tax rose 15%.

Yet, the overall earnings outlook has improved over the past two months, particularly for large- and mid-cap stocks, with estimates largely stabilizing, the report said. Sector-wise, this stability is being driven by modest upgrades in larger sectors such as oil & gas, banks, metals & mining, and IT services, Kotak said.

Sunny Agrawal, head of fundamental research at SBI Securities, said the texture of the current rally suggests that large-caps might steal the show for now. But typically, it’s the strength in large-caps that first pushes benchmark indices to new highs, after which, mid- and small-caps usually pick up steam and join the rally, he said.

Nifty Smallcap 250 finished 0.4% lower at 16,770.05, and Nifty Midcap 100 closed 0.1% higher at 61,113.15 on Thursday. Nifty Smallcap is about 10% away from its 23 September closing record high of 18,623.15, while Nifty Midcap 100 is 0.1% shy from hitting its record of 61,180.5.

Meanwhile, index heavyweights such as Reliance Industries Ltd, Maruti Suzuki India Ltd and Bharti Airtel Ltd were a drag on Nifty 50. Agrawal noted that these stocks, which were outperforming to date, have seen profit-taking, capping benchmark gains.

Agrawal remains most upbeat on banking, financial services and insurance stocks, thanks to its solid earnings outlook. Auto and auto ancillaries also look appealing, with comfortable valuations and healthy growth potential, according to him. A possible telecom tariff hike in December puts operators in a sweet spot, while a soft crude oil environment could help sectors like oil marketing companies, airlines, and tyres to deliver better returns, he said.