Indian equity benchmarks extended their gains on Tuesday, closing firmly in positive territory as investor sentiment received a significant boost from a landmark international trade development. The 30-share BSE Sensex climbed 319.77 points, or 0.39 per cent, to settle at 81,857.48. Similarly, the broader NSE Nifty rose 126.75 points, or 0.51 per cent, to close at 25,175.40.
Market Momentum Driven by Trade Agreement Optimism
The rally was primarily underpinned by renewed optimism following the announcement that India and the European Union have concluded negotiations for an ambitious free trade agreement. Officials have described this pact as the "mother of all deals," marking India's largest free trade agreement to date with the 27-nation bloc.
Prime Minister Narendra Modi confirmed the conclusion of the agreement after summit talks with European Commission President Ursula von der Leyen and European Council President Antonio Costa. This development comes amid a challenging global trade environment characterized by tariff uncertainties and protectionist measures.
Top Performers and Sectoral Movement
The banking and metal sectors emerged as notable gainers during the session. Among the top gainers on the Nifty 50 were Axis Bank, JSW Steel, Tata Steel, and NTPC. Axis Bank surged 4.60 per cent, while JSW Steel advanced 4.45 per cent. Adani Enterprises also witnessed strong buying interest, jumping over 5 per cent.
However, not all stocks participated in the rally. Mahindra & Mahindra (M&M) emerged as the top loser on both indices, declining 4.24 per cent. Kotak Mahindra Bank and Asian Paints also faced selling pressure, dropping 3.34 per cent and 3.00 per cent respectively.
Expert Commentary on Market Dynamics
Commenting on the day's trading activity, Ponmudi R, CEO of Enrich Money, noted that while the India-EU trade agreement provided some support to investor sentiment, broader risks limited the upside potential.
"Indian equities continued to trade with a measured and cautious undertone. The finalisation of the India-European Union bilateral trade agreement lent some support to investor sentiment amid a broader risk-off environment triggered by US tariff measures," Ponmudi observed.
He further added that persistent foreign fund outflows and subdued earnings growth weighed on market performance. "Sustained selling by foreign portfolio investors and muted third-quarter corporate earnings growth capped any meaningful upside in domestic equities," he explained.
Precious Metals Scale New Heights
In a parallel development, gold and silver futures surged to fresh lifetime highs on Tuesday, supported by strong safe-haven demand amid geopolitical tensions, tariff-related uncertainty, and weakness in the US dollar.
On the Multi Commodity Exchange (MCX), gold futures for February 5 delivery jumped Rs 2,522, or 1.62 per cent, to trade at Rs 1,58,559 per 10 grams, after touching a record high of Rs 1,59,820 earlier in the session.
Silver futures for March 5 delivery witnessed an even sharper rally, surging Rs 19,831, or 5.93 per cent, to Rs 3,54,530 per kg, after hitting a fresh peak of Rs 3,54,780.
Commodity Market Analysis
Explaining the sharp price movements in precious metals, Manoj Kumar Jain of Prithvifinmart Commodity Research stated that safe-haven demand remained exceptionally strong.
"Prices of precious metals have been supported by robust safe-haven demand amid global uncertainty, improving US consumer confidence data and ongoing weakness in the dollar," Jain noted.
He also cautioned investors about continued volatility in the commodities space. "We are experiencing very high price volatility in both precious metals. Silver prices could hold support near $98 per troy ounce, while gold may remain firm above $4,840 per troy ounce on a closing basis this week," he added.
The simultaneous rally in equities and precious metals highlights the complex dynamics currently at play in financial markets, where trade optimism is driving risk assets while geopolitical concerns are boosting demand for traditional safe havens.
