Investment strategist Dr. V K Vijayakumar has advised investors against attempting to time the market in today's volatile environment, emphasizing that spending time in the market proves more effective than trying to predict market movements. This guidance becomes particularly relevant as Trump's economic and foreign policies create significant geoeconomic and geopolitical disruptions with far-reaching global consequences.

India's Growth Performance Amid Global Uncertainty

India has demonstrated remarkable economic resilience in the post-COVID period, achieving impressive growth rates despite various headwinds. The country's GDP performance showcases its position as a leading global economy during challenging times.

This growth trajectory makes India the fastest-growing large economy globally during this period, achieved while maintaining financial stability despite challenges including Trump tariffs.

Corporate Earnings Challenge

While India's GDP growth remains robust, corporate earnings present a contrasting picture. The sharp decline in earnings growth has become a significant concern for market performance.

The underperformance of the Indian market correlates directly with this sharp decline in corporate earnings growth, highlighting the critical relationship between earnings and market trends.

Nominal GDP Growth Impact

Low inflation rates have affected nominal GDP growth, creating additional pressure on corporate earnings. The nominal GDP growth for FY26 is estimated at 8.1%, significantly below the Budget estimates of 10.1%. This shortfall has contributed to the subdued earnings growth in FY26, though expectations suggest improvement in FY27 as inflation returns to normal levels.

Market Volatility and Trump Policy Effects

Trump's policy announcements have created significant market volatility, particularly through tariff-related measures. The 'reciprocal tariffs' announced in April 2025 initially triggered negative global market reactions, though bilateral trade agreements subsequently helped avert a potential trade war. Similarly, the 'Greenland tariffs' targeting eight European countries created temporary market concerns before tensions subsided.

Dr. Vijayakumar notes that while tariff-related noise generates short-term volatility, long-term market trends depend on fundamental factors like economic growth and corporate earnings rather than geopolitical events.

Investment Strategy Recommendations

The investment expert recommends maintaining a long-term perspective despite ongoing geopolitical uncertainties. Key strategic points include:

• Stay invested: Continue existing investment positions rather than attempting market timing
• Continue investing: Maintain regular investment discipline regardless of short-term volatility
• Focus on fundamentals: Prioritize economic growth and corporate earnings over geopolitical noise
• Expect volatility: Prepare for heightened market fluctuations due to ongoing global uncertainties

Dr. Vijayakumar emphasizes that stock markets historically demonstrate an ability to overcome various challenges, suggesting they will navigate current Trumpian disruptions as well. He concludes that while personalities and events are temporary, economies and markets endure over the long term.

Indian stock market benchmark indices Sensex and Nifty 50 are expected to stage a rebound in the holiday-shortened week, supported by hopes of relief from US tariff measures and expectations around progress on the India-European Union trade agreement. Markets remained closed on January 26, 2026, for Republic Day, with trading resuming Tuesday on BSE and NSE.

Both indices witnessed sharp sell-offs on Friday, weighed down by persistent foreign institutional investor outflows, heightened geopolitical uncertainties, caution ahead of Union Budget 2026, and mixed corporate earnings for the December quarter. However, several key weekend developments may improve market sentiment.

US Tariff Relief Provides Hope

The Indian equity market could find support after US Treasury Secretary Scott Bessent signaled the possibility of rolling back additional 25% tariffs on India. Bessent indicated "there could be a path" to removing the levies, noting that India's purchases of Russian oil have declined sharply following tariff measures imposed by the Donald Trump administration.

India-EU Trade Deal Expectations Build

European leaders have arrived in India for the 16th India-EU Summit, where discussions will center on advancing a Free Trade Agreement aimed at strengthening bilateral trade ties. Progress on the India-EU trade deal could provide a counter-cyclical buffer for the Indian economy by enhancing export participation in global value chains, expanding market access, and supporting supply-chain diversification.

Madhavi Arora, Lead Economist at Emkay Global Financial Services Ltd, estimates that bilateral alignment could lift India's exports to the EU by $50 billion by 2031, led by medium-tech manufacturing. "Improved import efficiency and higher FDIs would further support productivity gains and tech transfers, while greater regulatory certainty could aid IT services exports, where the EU already accounts for approximately one-third of demand," Arora said.

Key beneficiary stocks from the likely India-EU trade deal include:

Pharmaceutical Sector:

• Dr Reddy's Laboratories
• Lupin
• Sun Pharmaceutical Industries

Chemicals Sector:

• SRF
• Navin Fluorine
• Gujarat Fluorochemicals
• Aarti Industries

RBI Announces Major Liquidity Injection

The Reserve Bank of India announced on Friday it will inject over ₹2 lakh crore of liquidity into the system through multiple measures:

The central bank will undertake government bond purchases under open market operations, including ₹50,000 crore each on February 5 and February 12.

Technical Outlook Remains Challenging

Nifty 50 plunged 2.51% last week amid heavy selling pressure across all sectors, weakening the overall market structure. The benchmark index decisively slipped below its key 200-day EMA, signaling a negative trend. The 21-day EMA crossing below the 55-day EMA confirms bearish momentum.

Dr. Ravi Singh, Chief Research Officer from Master Capital Services Ltd, noted that immediate support for Nifty 50 is placed near 24,850, with a break below potentially dragging the index toward 24,600. On the upside, resistance stands at 25,250, while sustained strength above this could lead to recovery toward 25,500.