Indian Stock Market Closes Higher on Positive EU Trade Deal and US Tariff Hopes
The Indian stock market opened the holiday-shortened week on a strong positive note, with key indices gaining significantly as investor sentiment improved markedly. This uptick was primarily fueled by the finalization of a historic free trade agreement between India and the European Union, alongside optimistic expectations that the United States might ease tariffs related to India's purchases of Russian oil.
Key Indices Show Robust Gains Amid Broad Market Support
The benchmark indices reflected this positive momentum clearly. The Nifty 50 settled 0.51% higher, closing at the 25,175 level, while the S&P BSE Sensex gained 0.66%, ending at 82,077 points. Broader markets also participated in the rally, with the Nifty Midcap 100 and Nifty Smallcap 100 indices each surging over 0.40%, indicating widespread investor confidence across market segments.
Sectoral Performance: Banking and Tech Shine, Auto Stocks Struggle
Market movements were sector-specific, with metals, technology, and banking stocks providing strong support to the indices. However, auto stocks faced significant selling pressure, limiting overall gains. This decline stemmed from growing concerns about intensified competition following a sharp reduction in import taxes on European-made cars. As reported by Reuters, citing an EU statement, the Indian government is slashing tariffs on cars to 10% over five years from as high as 110%, with an annual quota of 250,000 vehicles.
Historic EU Trade Agreement Boosts Market Sentiment
Prime Minister Narendra Modi announced that India concluded its biggest free trade agreement in history with the European Union after summit talks with EU leaders Ursula von der Leyen and Antonio Costa. Commerce and Industry Minister Piyush Goyal highlighted that India will gain "unprecedented" market access at concessional duties for over 99% of its exports by value in the EU market, providing a substantial boost to domestic labour-intensive sectors.
Top Gainers and Losers on January 27, 2026
Among individual stocks, notable gainers included Karur Vysya Bank, MCX, Adani Enterprises, NMDC Steel, and Axis Bank, which led the rally. The positive market environment was tempered by declines in auto stocks, reflecting the sector-specific challenges posed by the new trade dynamics.
Overall, the trading session underscored how global trade developments and domestic policy shifts are shaping market trends, with investors closely monitoring further updates on the implementation of the EU trade deal and potential US tariff adjustments.
