Mumbai: The Indian stock markets, represented by key indices Sensex and Nifty 50, are expected to see some recovery in the short trading week ahead, following the Republic Day holiday. Positive signals from the US regarding tariff relief and progress in the India-European Union (EU) trade agreement are providing reasons for cautious optimism.
Markets were closed on Monday, 26 January, due to Republic Day celebrations, with trading resuming on Tuesday at both BSE and NSE.
Last Friday, the markets experienced a sharp decline driven by continuous foreign investor selling, global tensions, caution ahead of the Union Budget, and mixed corporate earnings for the December quarter.
However, key developments over the weekend could improve market sentiment.
US Treasury Secretary Janet Yellen indicated a possible rollback of the additional 25 percent tariffs imposed on Indian goods. She noted that following the tariff imposition, India significantly reduced its purchase of Russian oil, which could provide relief to Indian markets.
Meanwhile, European leaders arrived in India for the 16th India-EU Summit to discuss advancing the Free Trade Agreement (FTA). This deal aims to strengthen trade ties, potentially benefiting both sides.
Experts believe the agreement will help India integrate better into global markets, boost exports, and establish new supply chains. Currently, about 17.3 percent of India’s exports and 8.4 percent of imports are linked to the EU. Projections suggest the FTA could increase India’s exports by $50 billion by 2031.
The agreement is also expected to attract more foreign direct investment, encourage technology exchange, and benefit IT service exports. Market analysts view the potential deal positively but stress that stability in the India-US relationship, currency steadiness, and easing global conditions are also crucial.
On the liquidity front, the Reserve Bank of India (RBI) announced plans to infuse over ₹2 lakh crore into the market. A 90-day repo auction worth ₹25,000 crore is scheduled for 30 January, followed by a $10 billion (approximately ₹91,000 crore) dollar-rupee swap auction on 4 February.
Additionally, RBI will purchase government bonds under open market operations (OMO) worth ₹1 lakh crore, split equally on 5 and 12 February.
Last week, the Nifty 50 index fell by 2.51 percent amid broad-based selling across sectors, reflecting market weakness. Technically, the Nifty closed below its 200-day exponential moving average (EMA), signaling bearish momentum. Furthermore, the 21-day EMA has crossed below the 55-day EMA, reinforcing the downtrend.
Experts identify 24,850 as a key support level for Nifty. A breach could see the index test 24,600. On the upside, resistance lies at 25,250, and a sustained move above this may push the Nifty to 25,500. Until such gains materialise, analysts advise a cautious approach, recommending selling during rallies.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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