The Tel Aviv Stock Exchange (TASE) opened the second week of 2026 with a decisive upward trajectory, particularly within the small-to-mid-cap segment. The TA-SME60 EW PC index, which tracks the 60 largest companies on the exchange not included in the TA-125, has become a primary focal point for investors seeking domestic growth. This positive momentum reflects a broader “risk-on” appetite among sophisticated investors as the local economy continues to demonstrate fundamental strength.

Strategic Performance and Intraday Resilience

The trading week concluded on a high note, with the index hitting an intraday peak of 1,390.38. Data from the January 9 session shows a consistent “mountain” pattern of growth, characterized by strong support at the 1,374.47 level. This technical stability suggests that despite a “delayed quote” environment typical of SME tracking, the underlying demand for these assets remains high. The equal-weight (EW) nature of the index ensures that performance is distributed across various sectors—including high-tech, real estate, and finance—rather than being skewed by a handful of mega-cap players.

Macroeconomic Context and Market Sentiment

While global markets, including the S&P 500 and Nasdaq, have faced early-year volatility due to shifting interest rate expectations, the Israeli SME sector has carved out a unique niche of outperformance. The index’s ability to trade at the top end of its 52-week range indicates that domestic institutional players and international funds are increasingly looking at Israeli innovation and local services as a hedge against global uncertainty. The absence of high-volume spikes suggests a period of healthy, steady accumulation rather than speculative volatility.

Sector Specifics and Growth Drivers

The surge to 1,390.38 is largely attributed to a combination of strong year-end earnings reports and optimistic projections for the 2026 fiscal year. In particular, sectors like technology and real estate within the SME60 have benefited from stabilized local interest rates and continued foreign direct investment. Investors are paying close attention to the Price-to-Earnings (P/E) ratios within this index, which currently offer a compelling growth-at-a-reasonable-price (GARP) profile compared to more saturated large-cap indices.

Looking ahead, the outlook for the TA-SME60 remains bullish but cautious. Investors should monitor the 1,390 resistance level; a sustained break above this point could signal a new leg of the rally toward the 1,450 mark. However, risks remain in the form of geopolitical shifts and potential adjustments in Bank of Israel monetary policy. For the coming weeks, the focus will stay on volume trends and whether the “Small-Cap Alpha” can maintain its lead over the TA-35 and TA-125 benchmarks.