MARKET SUMMARY
Indian benchmarks are set for a strong opening, with GIFT Nifty at 25,920 suggesting a more than 3% increase from yesterday’s Nifty close of 25,727. This rise is fueled by the excitement surrounding the India-US trade deal that reduced tariffs to 18% and led to a 2.5% rally in the Sensex, which went up by 2,073 points to 83,739, and the Nifty. There is expected to be ongoing buying momentum, supported by foreign institutional investors (FII) covering shorts and leadership from heavyweight stocks. However, profit-taking may limit intraday gains near 26,000, while traders should consider buying on dips, with support around 25,500.
KEY DRIVERS
– India-US Trade Deal: This historic agreement alleviates geopolitical tensions, boosts exports, and attracts FII inflows following record outflows; the market cap increased by Rs 12 lakh crore yesterday.
– Global Positivity: Positive performance from Asian markets, with Japan’s Topix up 2.2% and Australia’s ASX 200 up 1.3%; S&P 500 futures are up 0.2%, and the Stoxx Europe 600 is up 0.5%.
– Rupee Strength & FII Action: Support from the currency and short-covering contributed to yesterday’s surge, with heavyweights like Adani Ports, which raised its FY26 forecast, leading the gains.
– Earnings Boost: Strong third-quarter results from companies like Solar Industries, reporting a profit of Rs 446 crore, and Adani Ports, with a 21% profit increase, are fueling optimism.
SECTORS TO WATCH
Bullish: Defence (companies like BEL and HAL are in focus following the Budget), Ports/Logistics (notably Adani Ports), Metals (Hindalco is up 2.1% pre-open), and IT/AI (with Fractal Analytics IPO happening next week).
Cautious: FMCG (mixed performance from HUL and ITC) and potential volatility in Futures and Options trading due to the recent Securities Transaction Tax (STT) hike.
EVENTS
The Fractal Analytics IPO begins with anchor investors on February 6 and opens to retail investors on February 9, with the size reduced to Rs 283 crore. Keep an eye on third-quarter earnings from key players and pre-open movements in companies like Ultratech and Powergrid, which is up 2% industrially.
RISKS
Domestic institutions might sell into the 3% or more surges to manage volatility. The impact of the recent Budget STT on Futures and Options trading remains a concern.
CLOSING NOTE
Take advantage of the momentum from the trade deal, positioning long on dips. However, it is wise to trail stops to secure quick profits in this high-momentum environment.