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Informist, Wednesday, Jan. 28, 2026

By Arundathi A R

MUMBAI – Benchmark equity indices are seen extending gains on Wednesday following the announcement of a free trade agreement between India and the Europen Union on Tuesday. While the optimism around the India-EU FTA and the wait for details continue, market participants remain cautious ahead of the Union Budget for 2026-27 (Apr-Mar), scheduled on Sunday. Moreover, the depreciating rupee and foreign fund outflows continue to dampen market sentiment, analysts said.

India and the EU aim to enforce the recently concluded free-trade agreement by the end of 2026, Commerce Minister Piyush Goyal said Tuesday. The trade deal offers to cut tariffs on over 95% of export value for both sides and it aims to double bilateral trade by 2032. New Delhi's commitment to cut duty on cars to 10% from 110% is considered a key highlight of the trade deal. This will take place in a phased manner with a quota of 250,000 cars per year. However, analysts do not expect this to influence any sharp movement in equities in the near term. 

"In the near term, investors are awaiting the US Fed's (Federal Reserve) upcoming interest rate decision and the Union Budget for future direction," Vinod Nair, head of research, Geojit Investments Ltd., said in a note. While the apex bank is expected to hold rates steady at meeting, with the decision due at 0030 IST Thursday, Chair Jerome Powell's commentary on inflation and the timing of future rate cuts will be closely tracked for signals on global liquidity and emerging market flows. 

The Gifty Nifty contract suggests a higher opening for the Nifty 50 index Wednesday, although analysts are wary of several negative triggers for the market. At 0818 IST, the GIFT Nifty's February contract was at 25447 points, almost 272 points higher than the Nifty 50's close of 25175.40 points on Tuesday. The BSE Sensex closed at 81857.48 points, up 319.78 points or 0.4%. The Nifty 50 is expected to face resistance at 25550 points Wednesday.

Crude oil prices traded slightly higher for the second session, adding to the caution in the market. The March contract of Brent crude on the Intercontinental Exchange was 0.2% higher at $67.71 per barrel at 0819 IST.

Analysts were firm on their view of intense foreign investor selling until the Budget shows some positive news. However, they also project this Budget to be a "low-impact event for Indian equities". They believe that many decisions such as the cuts in Goods and Services Tax and income tax rationalisation were already taken beforehand. This limits the room for further positive reforms that may have an impact. 

India's energy sector is seen offering potential investment opportunities worth $500 billion to make the country independent in energy production. In natural gas, Prime Minister Narendra Modi Tuesday said, "We are aiming to make LNG (liquefied natural gas) transportation vessels domestically." India is currently the third-largest energy consumer and importer of crude. It aims to boost to $100 billion the opportunities on offer in oil exploration, in the effort to lift the area under exploration to 1 million square kilometres, he said. Following this, investors are expected to keep a close eye on energy stocks Wednesday.

Foreign investors continued to be net sellers for the 15th straight session on Tuesday, offloading INR 30.68 billion worth of equities in the Indian market. These investors are expected to continue their selling spree until corporate earnings pick up, analysts said. Additionally, concerns about high valuations in the domestic market as compared to other emergining markets continue, which lead to such outflows. However, domestic investors continued to support the market by buying INR 90 billion of equities Tuesday.

On the earnings front, Asian Paints posted a 5% on-year decline in its consolidated net profit for the December quarter. Its revenue for the latest quarter rose almost 4% on year. Both the metrics failed to meet analysts' estimates. A one-time cost of INR 1.58 billion related to the implementation of new labour codes impacted the company's December quarter earnings.

Tata Consumer Products reported a robust jump of 38% on year in its net profit for the December quarter, aided by strong volume-led growth in its India-branded business. Its consolidated revenue from operations rose 15% on year. While the bottom line of the company fell short of the Street's expectations, its revenue for the quarter surpassed analysts' expectations marginally.

Market participants await the December quarter earnings of Larsen & Toubro, Maruti Suzuki, SBI Life Insurance, and Bharat Electronics, scheduled later in the day.

Barring the Dow Jones Industrial Average, all other US indices closed higher Tuesday ahead of corporate earnings. The S&P 500 ended at a record closing high of 6978.6 points. Asian indices were mixed in early trade, with South Korea's KOSPI gaining the most. Japan's TOPIX gained the least among Asian indices.  End

US$1 = INR 91.72

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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