Indian benchmark indices Sensex and Nifty 50 are positioned for a marginally higher opening following mixed global market signals and key domestic developments. The markets demonstrated resilience on Monday, breaking a five-day losing streak amid indications of potential US-India trade deal discussions.

Market Performance and Outlook

The previous trading session showed encouraging signs for Indian equities:

Gift Nifty was trading around the 25,926 level, representing a premium of nearly 50 points from the Nifty futures' previous close, indicating positive momentum for the opening session. Market experts suggest maintaining a selective, stock-specific approach with disciplined risk management given the current environment of mixed cues and elevated volatility.

Global Market Developments

Asian Markets Performance: Asian markets traded higher, led by strong gains in Japanese equities. Japan's Nikkei 225 surged 3.40%, while the Topix rallied 2.13%. South Korea's Kospi gained 0.62%, though the Kosdaq declined 0.30%. Hong Kong's Hang Seng Index futures indicated a higher opening.

US Market Records: US stock markets ended higher with both the S&P 500 and Dow Jones registering record closing highs:

Notable individual stock movements included Apple rising 0.34%, AMD gaining 2.22%, and Walmart jumping 3.00%, while Microsoft fell 0.44% and American Express declined 4.30%.

Key Policy and Economic Updates

Trump Administration Tariff Announcement: US President Donald Trump announced immediate implementation of 25% tariffs on any country conducting business with Iran, stating the measure would apply to "any and all business being done with the United States of America."

Federal Reserve Stance: Federal Reserve Bank of New York President John Williams indicated that monetary policy is "in a good place," with no near-term pressure to change interest rate levels.

Domestic Economic Indicators

Inflation Data: Retail inflation rose to a three-month high of 1.33% in December, primarily driven by higher food prices. This represents an increase from 0.71% in November, though significantly lower than the 5.22% recorded in December 2024.

Tax Collection Performance: Direct tax collections demonstrated strong growth, jumping 8.80% year-on-year to ₹18.37 lakh crore as of mid-January. This compares favorably to ₹16.88 lakh crore collected during the same period in the previous year.

Corporate Results and Commodity Updates

TCS Q3 Performance: Tata Consultancy Services reported mixed quarterly results:

The company declared a total dividend of ₹57.00 per share.

Commodity Market Movements: MCX gold and silver prices reached record highs, with gold gaining over 2.00% to near ₹1.42 lakh per 10 grams and silver jumping more than 6.00% to above ₹2.68 lakh per kg. Crude oil prices rose to near one-month highs, with Brent crude gaining 0.69% to $64.29 per barrel and WTI crude futures advancing 0.71% to $59.92.

Indian equity markets staged a recovery on Monday, snapping a five-day losing streak after US Ambassador to India Sergio Gor provided assurance that both countries would engage in trade discussions. The positive sentiment helped markets recover from recent concerns over stalled trade negotiations and potential tariff threats.

Market Performance Overview

Both major indices posted modest gains in a volatile trading session, recovering significantly from their intraday lows.

Both indices recovered approximately 1.2% from their intraday lows as the diplomat's remarks triggered liquidation of bearish positions. The recovery provided much-needed relief after markets had shed 2.5% last week, marking the biggest weekly loss since September.

Trade Deal Concerns and Recovery Catalyst

Markets had been under pressure following President Trump's backing of legislation allowing 500% tariffs on countries engaging in exchange of Russian-origin uranium and petroleum products. Commerce Secretary Howard Lutnick's recent comments had further dampened sentiment regarding US-India trade relations.

Gor's comments upon arriving in New Delhi to assume his ambassadorial role provided immediate market relief. "The US ambassador's comments gave the market some relief that both sides are actively engaged in firming up a trade deal," said Narendra Solanki, head of fundamental research at Anand Rathi Share and Stock Brokers Ltd.

Technical Analysis and Market Outlook

Despite the recovery, technical analysts remain cautious about near-term market direction. Rohan Shah, technical analyst at Asit C Mehta Investment Intermediates, noted that momentum indicators were in oversold territory, which aided the quick recovery.

However, the market's position remains precarious. "If the index fails to quickly reclaim the 26,000 level, Nifty is likely to resume selling pressure, with downside potential toward the 25,200-25,000 zone," Shah warned.

Volatility and Broader Market Performance

The India Volatility Index (VIX) rose 4% to 11.37 levels, indicating continued uncertainty among traders despite the day's recovery. Mid-cap and small-cap indices underperformed, with the Nifty Midcap 150 declining 0.2% and Nifty Small-cap 250 falling 0.7%.

Investment Flows and Regional Performance

Foreign portfolio investors remained net sellers, offloading shares worth ₹3,638.00 crore, while domestic institutions provided support with purchases of ₹5,839.00 crore.

Asian markets showed positive momentum, with Japan gaining 1.6%, China advancing 1.1%, Hong Kong rising 1.4%, South Korea up 0.8%, and Taiwan climbing 0.9%. European markets remained flat with the Stoxx 600 trading sideways.

Apurva Sheth, head of research at Samco Securities, expects the Nifty to trade between 25,800 and 26,400 for the remainder of January, with markets likely remaining range-bound pending developments in US-India trade negotiations and the upcoming budget announcement.