Indian stock markets are positioned for a marginal recovery on Friday after experiencing four consecutive sessions of losses driven by renewed US tariff concerns. The Gift Nifty futures were trading at 25,998.50 points as of 8:02 a.m. IST, signaling that the Nifty 50 would open above Thursday's close of 25,876.85.

Market Performance and Tariff Impact

The recent market decline has been significant, with both major indices posting notable losses over the past four trading sessions.

The sell-off was triggered by US President Trump's hints at further raising tariffs on Indian goods, citing concerns over New Delhi's purchase of Russian crude oil. The US has already imposed tariffs of up to 50% on imports from India, which is the world's second-largest buyer of Russian oil. This comes as New Delhi seeks to finalize a long-awaited trade deal with Washington.

Supreme Court Ruling Awaited

Investors are closely watching for a US Supreme Court ruling on the legality of Trump's tariffs. If the court deems these tariffs "illegal," the US government could be forced to refund nearly $150.00 billion to importers, potentially providing significant relief to affected markets and companies.

Foreign Investment Outflows Continue

Foreign portfolio investors have maintained their selling pressure on Indian equities, offloading approximately $900.00 million worth of Indian shares in January. This continues the trend from 2025, which saw record outflows of $19.00 billion from Indian markets.

Major Corporate Developments

Several significant corporate announcements are drawing investor attention:

Bajaj Group Insurance Deal

Bajaj Finserve announced that Bajaj Group has acquired a 23% stake in its insurance subsidiaries from Allianz SE for ₹213.90 billion.

Infrastructure and Healthcare Wins

BHEL secured a substantial order worth ₹54.00 billion from JV Bharat Coal Gasification & Chemicals, strengthening its order book in the energy sector.

Venus Remedies received marketing authorization in Indonesia for its antibiotic combination Ceftazidime and Avibactam, expanding its international presence in the pharmaceutical market.

Energy Sector Developments

Reliance Industries, which operates the world's largest refining complex, indicated it will consider buying Venezuelan oil if sales are permitted to non-US buyers, potentially diversifying its crude oil sourcing strategy.

Market Outlook

Analysts suggest that the benchmarks could find support after the sustained four-session decline, with buying interest expected around current levels. However, market experts emphasize that a resolution of trade uncertainty and strength in domestic corporate earnings remain crucial factors for any sustained upward movement in the indices.

Bernstein's Rupal Agarwal has recommended that investors maintain a neutral stance on Indian equities, advising against keeping them "underweight" in portfolios despite near-term market challenges. In her latest note released on Friday, January 9, Agarwal emphasized that Indian equities present a balanced risk-reward setup that warrants careful consideration.

Market Performance and Recent Volatility

Indian markets have experienced significant selling pressure recently after reaching record highs at the start of the year. The impact has been substantial, as demonstrated by Thursday's market performance:

Near-Term Challenges Identified

Agarwal has outlined several potential headwinds that Indian markets may face in the coming period. These challenges include stretched valuations across various segments, a potential rise in risk-premium that could affect investor sentiment, and a challenging stock-picking environment that may complicate investment decisions. Additionally, the lack of macro recovery and better valuations for defensive-tilted stocks present further concerns for market participants.

Positive Tailwinds Supporting Market Outlook

Despite the challenges, Bernstein's analysis identifies several favorable factors that support a balanced view of Indian equities:

• Strong earnings recovery cycle heading towards potential upgrades
• Reasonable relative valuations compared to historical levels
• Low long-term earnings growth expectations providing room for positive surprises
• Potential return of foreign capital to Indian markets
• Resilient domestic flows maintaining market support
• Likelihood of US-India trade deal benefiting bilateral economic relations

Earnings Season Developments

The third quarter earnings season has commenced with early reports from companies such as GM Breweries, while IREDA reported results on the same day as Agarwal's note. The focus will shift to major index constituents as Nifty 50 companies begin their earnings announcements:

The earnings reports from these major IT companies will be particularly significant given their substantial weightage in the Nifty 50 index and their role as bellwethers for the broader technology sector's performance during the quarter.