Indian Stock Market Poised for Rebound on Tuesday
The Indian stock market benchmark indices, Sensex and Nifty 50, are anticipated to open higher on Tuesday, marking a potential recovery from the sharp downturn experienced last week. This optimistic outlook is largely driven by positive global market signals and a series of upcoming economic events that could influence trading patterns.
Recovery from Last Week's Decline
On Friday, the equity indices faced a significant sell-off, primarily due to heightened geopolitical uncertainties and continuous foreign capital outflows. The Sensex plummeted by 769.67 points, or 0.94%, closing at 81,537.70, while the Nifty 50 dropped 241.25 points, or 0.95%, settling at 25,048.65. The market remained closed on Monday, January 26, 2026, in observance of Republic Day, providing a brief pause before the anticipated rebound.
Global Market Influences
Asian markets presented a mixed performance early Tuesday, with Japan's Nikkei 225 declining by 0.24% and South Korea's Kospi falling 0.36%, partly influenced by US President Donald Trump's announcement of increased tariffs on South Korea. Conversely, Hong Kong's Hang Seng index futures suggested a higher opening, indicating regional variability.
In the United States, Wall Street ended higher on Monday, with the S&P 500 and Nasdaq advancing for a fourth consecutive session. The Dow Jones Industrial Average surged 313.69 points, or 0.64%, to 49,412.40, while the S&P 500 gained 34.62 points, or 0.50%, to 6,950.23. The Nasdaq Composite increased by 100.11 points, or 0.43%, closing at 23,601.36. Notable stock movements included Apple's rise of 2.97% and Nvidia's decline of 0.64%.
Key Triggers for the Week
Market participants are closely monitoring several critical factors that could serve as significant triggers this week:
- India-US Trade Deal: Hopes for tariff relief have been bolstered by US Treasury Secretary Scott Bessent's indication of a possible rollback on additional 25% tariffs on India, citing a sharp decline in India's purchases of Russian oil.
- Union Budget 2026: Expectations surrounding the upcoming budget announcements are likely to influence investor sentiment and market dynamics.
- US Federal Reserve Meeting: The outcome of the Fed's policy meeting is a key global event that could impact interest rates and economic outlook.
- Q3 Results: Corporate earnings reports, such as Axis Bank's Q3FY26 results showing a 3% YoY rise in net profit to ₹6,489.6 crore, are driving stock-specific actions.
- Geopolitical Developments: Ongoing tensions, including those over Greenland, add to market volatility.
- Foreign Institutional Investments: The flow of foreign capital remains a crucial factor for market liquidity and direction.
- Crude Oil Prices and Rupee Trajectory: Trends in these areas are essential for understanding broader economic pressures.
- Donald Trump Tariff Policies: Continued scrutiny of US trade policies under the Trump administration affects global trade sentiments.
Additional Market Cues
The Gift Nifty was trading around the 25,160 level, indicating a premium of nearly 81 points from the Nifty futures' previous close, suggesting a positive start for Indian indices. Meanwhile, the US dollar hit a four-month low, with the dollar index at 97.05, reflecting broader currency market shifts. Precious metals saw declines, with Comex gold falling 1.16% to $5,023.60 an ounce and silver dropping 6.41% to $108.095 an ounce.
Expert Insights and Future Outlook
According to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd., markets will continue to track global trade negotiations and geopolitical dynamics closely. Stock-specific actions are expected to be driven by ongoing Q3 earnings announcements, highlighting the importance of corporate performance in current market conditions.
In a significant development, India and the European Union have concluded negotiations for a free trade agreement (FTA), with an official announcement expected soon. This deal aims to enhance economic integration, potentially boosting trade and investment flows between the regions.
As the week progresses, investors are advised to stay informed on these multifaceted triggers, which collectively shape the trajectory of the Indian stock market amidst a complex global economic landscape.
