The Indian stock market delivered a strong performance on Tuesday, January 27, with benchmark indices posting notable gains following a significant policy announcement. Prime Minister Narendra Modi's declaration of a free trade agreement (FTA) between India and the European Union provided the catalyst for the day's positive market sentiment.

Benchmark Index Performance

Both major indices closed well into positive territory, reflecting broad investor confidence in the market.

The Sensex's gain of 320 points brought it to 81,857.48, representing a 0.39% increase from the previous session. Meanwhile, the Nifty 50 demonstrated slightly stronger momentum, advancing 127 points to close at 25,175.40, marking a 0.51% rise.

Broader Market Participation

The positive sentiment extended beyond large-cap stocks, with mid-cap and small-cap segments also participating in the rally. This broad-based participation indicates widespread investor optimism across market capitalizations.

The Nifty Midcap 150 index outperformed the benchmark indices with a gain of 0.53%, while the Nifty Smallcap 250 index recorded a more modest but positive advance of 0.20%.

Market Catalyst

The day's gains were primarily attributed to Prime Minister Modi's announcement regarding the India-EU free trade agreement. This development appears to have boosted investor confidence about potential benefits for Indian businesses and the broader economy from enhanced trade relations with European markets.

The broad-based nature of the gains across different market segments suggests that investors view the FTA announcement as having wide-ranging positive implications for various sectors and company sizes within the Indian market ecosystem.

Indian equity markets exhibited mixed performance on Tuesday afternoon, with benchmark indices trading in a narrow range as investors adopted a wait-and-watch approach ahead of the upcoming Union Budget. The cautious sentiment reflected market participants' focus on potential policy announcements while balancing global market developments and domestic corporate earnings.

Market Performance Overview

As of 12:45 pm on Tuesday, the benchmark indices showed divergent trends with marginal movements in both directions.

The market opened on a mixed note, with the Sensex beginning the session at 81,436.79 against the previous close of 81,537.70, while the Nifty opened at 25,063.35 compared to the previous close of 25,048.65. Trading remained choppy through the morning session as participants weighed the impact of continued foreign institutional investor outflows against domestic institutional support.

Top Performers and Laggards

Adani group companies dominated the gainers' list, with Adani Enterprises leading the charge by surging 4.98% to ₹1,957.10. The financial sector also contributed positively, with Axis Bank jumping 4.51% to ₹1,314.70.

On the declining side, Mahindra & Mahindra emerged as the top loser, falling 4.08% to ₹3,398.70, while banking sector stock Kotak Mahindra Bank declined 3.07% to ₹409.80.

Broader Market and Sectoral Trends

Broader market indices displayed weakness despite the mixed performance of benchmark indices. The mid and small-cap segments faced selling pressure, indicating selective stock picking by investors.

Market breadth remained negative, with 2,380 stocks declining against 1,724 advances on the BSE, while 187 stocks remained unchanged. A total of 65 stocks hit 52-week highs while 576 touched 52-week lows. Additionally, 157 stocks traded in the upper circuit and 202 in the lower circuit.

Sectoral performance showed mixed trends, with financial services providing support to the benchmarks. The Nifty Financial Services index rose 0.31% to 26,903.25, while the Nifty Bank index gained 0.24% to 58,611.05, helping offset weakness in other sectors.

Market Outlook

The cautious trading pattern reflects investor sentiment ahead of the Union Budget scheduled for February 1. Market participants are closely monitoring policy announcements that could impact various sectors, while also keeping track of global market cues and the ongoing corporate earnings season. The mixed performance suggests that investors are adopting a selective approach, focusing on fundamentally strong stocks while remaining wary of broader market movements.