Markets rebound sharply on trade optimism; Sensex gains 302 points

Indian equity markets staged a smart recovery on Monday, snapping early losses to close in positive territory, aided by optimism over India–US trade relations and steady domestic institutional buying.

At the close, the Sensex rose 301.93 points, or 0.36 percent, to 83,878.17, while the Nifty added 106.95 points, or 0.42 percent, to settle at 25,790.25, hovering near the 25,800 mark. Market breadth remained weak, with 1,365 stocks advancing, 2,561 declining, and 158 remaining unchanged.

The rebound followed reassuring comments from US Ambassador to India, Sergio Gor, who said that India and the United States are actively engaged in trade negotiations, with the next round of talks scheduled for January 13. His remarks helped allay concerns over tariffs and delays in a formal trade agreement, triggering strong intraday buying.

From the day’s lows, the Sensex recovered nearly 1,000 points, while the Nifty reclaimed the 25,700 level, supported by short covering, value buying in heavyweight stocks, and continued purchases by domestic institutional investors, even as foreign investors remained net sellers.

Sectorally, metals led the gains, with the metal index rising 2 percent, followed by PSU banks (up 0.7 percent) and FMCG (up 0.6 percent). In contrast, capital goods, pharma, media, and realty indices declined between 0.5 and 1.5 percent. The broader markets underperformed, with the BSE Midcap index falling 0.4 percent and the Smallcap index declining 0.7 percent.

On the Nifty, Coal India, Trent, Asian Paints, Tata Steel, and JSW Steel emerged as top gainers, while Eicher Motors, Infosys, Bajaj Finance, Tata Motors Passenger Vehicles, and Bajaj Auto were among the key laggards.

Commenting on the market action, Abhinav Tiwari, Research Analyst at Bonanza, said the sharp turnaround was driven by improved sentiment following positive cues on India–US trade relations. He noted that banking and export-oriented stocks led the recovery, while metals benefited from renewed buying interest. However, he cautioned that global risks persist and said outcomes of the upcoming trade talks and IT earnings will be crucial near-term triggers.

From a technical perspective, Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the market found strong support near 25,500 on the Nifty and 82,700 on the Sensex, leading to a sharp bounce. He described the intraday market structure as positive but advised traders to adopt a “buy on dips, sell on rallies” approach. Key support levels lie at 25,650 and 25,600, while immediate resistance is seen in the 25,900–25,950 zone.

Meanwhile, Vinod Nair, Head of Research at Geojit Investments, said sentiment improved on favourable trade-related remarks ahead of negotiations. He added that commodities outperformed due to strength in metals amid supply constraints, while value buying was visible in consumer and banking stocks on expectations of stronger Q3 earnings. Precious metals also remained firm amid ongoing geopolitical tensions.

On the currency front, the rupee closed flat at 90.16 against the US dollar, unchanged from the previous session.