Indian benchmark indices are poised for a positive opening on January 13, with early indicators suggesting continued momentum from the previous session's recovery. The GIFT Nifty is trading higher at around 25,924, providing encouraging signals for domestic markets after snapping a prolonged losing streak.

Market Performance Overview

Indian equity benchmarks demonstrated resilience on January 12, ending in green territory during a volatile session. The recovery marked a significant turnaround after five consecutive days of losses, with both indices settling near their daily highs.

Global Market Developments

Asian Markets: Asian shares climbed to near record levels, supported by optimism over earnings and regional economic growth. Investors have broadened their focus beyond US markets, contributing to the positive sentiment across the region.

US Equities: American markets registered record closing highs on Monday, with technology companies and retailer Walmart leading gains. The performance came despite concerns about the US Justice Department's criminal investigation of Federal Reserve Chair Jerome Powell.

Bond Markets and Currency Movements

US Treasury yields remained relatively stable, with the 10-year yield holding at 4.17% and 2-year yield at 3.53%. The dollar index showed little movement in early Tuesday trade against major currencies.

Asian currencies displayed mixed performance, with the South Korean Won leading declines, followed by the Thai Baht, Indonesian Rupiah, Japanese Yen, and Philippine Peso. However, the Chinese Renminbi, Taiwan Dollar, and Malaysian Ringgit posted marginal gains.

Institutional Investment Flows

Foreign Institutional Investors maintained their selling pressure for the sixth consecutive session on January 12, offloading equities worth approximately ₹3,638 crore. This continued outflow reflects ongoing concerns among international investors.

In contrast, Domestic Institutional Investors demonstrated strong buying interest, remaining net buyers with purchases exceeding ₹5,800 crore. This domestic support has been crucial in providing stability to the markets amid foreign selling pressure.

Commodity Market Updates

Commodity markets showed mixed trends, with oil prices trading with marginal gains in early trade. Precious metals experienced varied performance, as spot gold steadied while silver slipped after both metals reached record highs on Monday.

The positive GIFT Nifty reading at 25,924 suggests market participants are optimistic about continuing the recovery momentum established in the previous session, particularly given the supportive global market environment and strong domestic institutional buying.

Global investors are positioning themselves for active value hunting in 2026 as growing concerns over an AI bubble push traders to diversify beyond highly valued technology stocks. This strategic shift comes after a volatile 2025 that saw US stocks plunge to near bear market territory in April following sweeping tariffs, before eventually rebounding to record highs.

Small Cap Stocks Poised for Comeback

After years on the sidelines, US small cap stocks are returning to the spotlight as earnings prospects improve and borrowing costs decline. "The big difference going into 2026 is that we finally are seeing earnings growth come back into small caps," said Oren Shiran, portfolio manager at Lazard Asset Management.

Small cap companies typically carry higher debt loads, making them among the first beneficiaries when interest rates move lower, according to traders' expectations compiled by LSEG.

Gold Maintains Historic Momentum

Gold's exceptional performance in 2025 marked its best year since the 1979 oil crisis, with major financial institutions maintaining bullish outlooks for 2026. Both J.P. Morgan and Bank of America forecast gold prices reaching $5,000.00 per ounce this year, compared with $4,314.12 in 2025.

Analysts at Wells Fargo Investment Institute expect favorable conditions to persist, though gains may come at a more measured pace. Central bank buying provides additional support as institutions continue diversifying reserves beyond dollar-denominated assets.

Sector Opportunities in Healthcare and Financials

Healthcare emerges as a standout sector, powered by policy boosts and the growing reach of weight-loss drugs, according to Morgan Stanley analysis. The financial sector, particularly banks, is expected to outperform as M&A activity accelerates and loan growth rebounds.

Currency and Emerging Market Dynamics

The US dollar faces another bout of weakness in 2026 as the Federal Reserve cuts interest rates to cushion a cooling labor market. Political uncertainty, including new Fed chair appointments, adds to expected volatility. This dollar weakness increases appeal for emerging market currencies including China's yuan and Brazil's real.

Commodity-linked currencies such as the Australian and New Zealand dollars could benefit from improving global growth outlook, while the Czech crown may gain from rate hikes by the Czech National Bank.

High-Yield Bonds and Event Contracts Surge

High-yield and corporate bond markets show robust activity prospects, driven by dealmaking demand and AI companies seeking capital for data center investments. As of mid-December 2025, high-yield issuance reached $325.00 billion, representing 17.00% growth from 2024 and the strongest performance since 2021's pandemic-era record.

Event contracts represent an emerging "supercycle" opportunity, allowing users to wager on real-world events across politics, sports, and financial markets. "We're in the early stages of a supercycle for this burgeoning asset class," stated Robinhood CEO Vlad Tenev. Citizens Financial analysts estimate prediction markets currently generate nearly $2.00 billion in revenue, potentially jumping five-fold by 2030 as institutional participation increases.

Strategists at BlackRock Investment Institute emphasize that "this environment is ripe for active investing," as investors navigate selective opportunities across these diverse asset classes while managing the transition from AI-focused momentum to broader value-driven strategies.