Indian Markets Rebound 0.4% as US Ambassador Eases Trade Deal Concerns
Indian equity markets recovered from a five-day losing streak on Monday, with Nifty gaining 106.95 points to close at 25,790.25 and Sensex rising 301.93 points to 83,878.17, both up 0.4%. The recovery followed reassuring comments from US Ambassador Sergio Gor about upcoming trade discussions between the two countries. Despite the bounce-back, the VIX fear gauge increased 4% to 11.37, reflecting continued uncertainty among traders about future market direction.
*this image is generated using AI for illustrative purposes only.
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.
| Index | Closing Level | Points Change | Percentage Change |
|---|---|---|---|
| NSE Nifty | 25,790.25 | +106.95 | +0.4% |
| BSE Sensex | 83,878.17 | +301.93 | +0.4% |
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%.
| Market Segment | Performance |
|---|---|
| Advancing Stocks | 1,468 |
| Declining Stocks | 2,837 |
| Total Stocks Traded | 4,485 |
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.
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