The key equity benchmarks ended modestly higher in a volatile session, supported by improving risk appetite. Sentiment was lifted by optimism around the India-European Union free trade agreement and expectations of a potential easing of US tariff measures related to India's imports of Russian oil. The rupee rebounded from record lows, providing additional support to domestic equities, while firm global market cues aided sentiment. Investors also took note of remarks at Davos by US Treasury Secretary Scott Bessent, who indicated that the additional 25% tariffs on India could be withdrawn amid reduced Indian purchases of Russian oil. Separately, liquidity support from the Reserve Bank of India boosted confidence after the central bank announced measures to inject funds into the banking system. The Nifty closed above the 25,150 level, led by gains in metal and banking stocks.

The S&P BSE Sensex jumped 319.78 points or 0.39% to 81,857.48. The Nifty 50 index added 126.75 points or 0.51% to 25,175.40.

Mahindra & Mahindra (down 4.25%), Kotak Mahindra Bank (down 2.58%) and Bajaj Finance (down 1.07%) were major Nifty drags today.

In the broader market, the S&P BSE Mid-Cap index rose 0.44%, while the S&P BSE Small-Cap index fell 0.03%.

The market breadth was negative. On the BSE, 1803 shares rose and 2510 shares fell. A total of 171 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, jumped 1.83% to 14.45.

RBI Liquidity Measures:

The Reserve Bank of India on Friday announced a set of liquidity-enhancing measures to ease conditions in the banking system. These include a Rs 25,000 crore 90-day variable rate repo operation on January 30, a $10 billion USD/INR buy-sell swap auction with a three-year tenor on February 4, and open market purchases of government securities worth Rs 1 lakh crore in two equal tranches on February 5 and February 12. The RBI said it will continue to closely monitor liquidity and market conditions and act as needed to ensure orderly system liquidity.

India-EU Trade Deal:

India and the European Union on January 27, 2026, concluded a landmark Free Trade Agreement at the 16th India-EU Summit, marking a major milestone in bilateral economic ties between the world's 4th and 2nd largest economies, together accounting for about 25% of global GDP. The pact grants preferential market access to over 99% of Indian exports to the EU, with labour-intensive sectors such as textiles, leather, gems and jewellery, marine products and engineering goods set to benefit, while safeguarding sensitive areas like dairy and key agricultural products. The agreement delivers calibrated auto liberalisation, ambitious access in services, and a structured mobility framework to support skilled and semi-skilled Indian professionals. It also addresses non-tariff barriers, CBAM-related cooperation, digital trade, MSMEs, and future technologies including AI and clean energy. With India-EU goods trade at Rs 11.5 lakh crore and services trade at Rs 7.2 lakh crore in 2024-25, the FTA is expected to significantly boost exports, jobs, investment, and India's integration into global value chains, laying the foundation for inclusive, resilient and future-ready growth.

Numbers to Track:

The yield on India's 10-year benchmark federal paper rose 0.63% to 6.706 as compared with the previous close of 6.664.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 91.7100 compared with its close of 91.9050 during the previous trading session.

MCX Gold futures for 5 February 2026 settlement advanced 1.80% to Rs 158,860.

The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.03% to 97.02.

The United States 10-year bond yield rose 0.21% to 4.223.

In the commodities market, Brent crude for March 2025 settlement shed 04 cents or 0.06% to $65.55 a barrel.

Global Markets:

Most European shares traded higher on Tuesday, helped by a trade deal between the European Union and India, as investors await more quarterly earnings and a Federal Reserve rate decision.

Asian indices ended higher despite concerns regarding tariffs resurfacing post-US President Donald Trump threatening to increase levies on South Korean goods.

Trump said on Truth Social that South Korea's legislature has not approved Seoul's trade deal with Washington and that tariffs on the country will climb to 25%, from 15%.

Overnight in the U.S., the S&P 500 advanced 0.50% to settle at 6,950.23, while the Dow Jones Industrial Average gained 0.64% to close at 49,412.40.

The Nasdaq Composite climbed 0.43% to end at 23,601.36, supported by jumps of about 3%, 2% and 1% in Apple, Meta Platforms and Microsoft, respectively, ahead of their earnings reports later in the week.

Stocks in Spotlight:

Asian Paints fell 2.81% after the company's consolidated net profit declined 4.55% to Rs 1,059.87 crore in Q3 FY26 as against Rs 1,110.48 crore in Q3 FY25. However, revenue from sales rose 3.85% year on year (YoY) to Rs 8,849.72 crore in Q3 FY26.

Axis Bank jumped 4.31% after the bank reported a 2.94% increase in standalone net profit to Rs 6,489.57 crore in Q3 FY26 compared with Rs 6,303.77 crore in Q3 FY25. Total income increased 4.26% year on year (YoY) to Rs 38,500.06 crore in Q3 FY26.

IndusInd Bank slipped 0.18%. The bank reported 88.5% decline in standalone net profit to Rs 161.16 crore on 13.67% fall in total income to Rs 13,079.39 crore in Q3 FY26 over Q3 FY25.

DCB Bank surged 9.50% after the bank reported 22% jump in net profit to Rs 185 crore on a 16% increase in total income to Rs 846 crore in Q3 FY26 as compared with Q3 FY25.

Shriram Finance lost 0.39%. The NBFC's standalone net profit declined 29.36% to Rs 2,521.67 crore on a 13.88% increase in total income to Rs 12,191.58 crore in Q3 FY26 over Q3 FY25.

Sona BLW Precision Forgings rose 6.52% after the auto components maker posted strong quarterly performance in Q3 FY26. Consolidated net profit on an adjusted basis increased 20% YoY to Rs 180.9 crore in Q3 FY26. The company disclosed that reported PAT was impacted by a one-time charge of Rs 30.1 crore linked to the new labour code. Revenue rose 39% YoY to Rs 1,208.5 crore in Q3 FY26, primarily driven by the expansion of electric vehicle traction motor and railway business in India.

Kirloskar Pneumatic Company rose 4.12% after the company was provisionally selected by the Government of India in the latest round of the Production-Linked Incentive (PLI) scheme for white goods. Kirloskar Pneumatic has committed an investment of Rs 320 crore to manufacture key components such as compressors, motors, heat exchangers and sheet metal parts.

Separately, Kirloskar Pneumatic Company reported a solid performance for the quarter ended December 2025. On a consolidated basis, net profit came in at Rs 42.2 crore, up 15.9% YoY from Rs 36.4 crore in the corresponding quarter last year. Net sales rose 18.8% YoY to Rs 406.9 crore in Q3 FY26, compared with Rs 342.6 crore in the year-ago period.

Tata Consumer Products gained 2.86% after the company's consolidated net profit jumped 37.91% to Rs 384.61 crore on a 15.04% increase in revenue from operations to Rs 5,112 crore in Q3 FY26 over Q3 FY25.

Godrej Consumer Products tumbled 5.34% after the company's consolidated net profit remained flat at Rs 497.91 crore in Q3 FY26, even as net sales increased 8.8% year-on-year to Rs 4,079.47 crore compared with Q3 FY25.

Ultratech Cement advanced 1.97% after the company reported a 26.92% jump in consolidated net profit to Rs 1,725.40 crore on 22.78% increase in revenue from operations to Rs 21,829.68 crore in Q3 FY26 over Q3 FY25.

Bharat Petroleum Corporation (BPCL) added 2.30% after the company reported a 62.29% jump in standalone net profit to Rs 7,545.27 crore in Q3 FY26 as against Rs 4,649.20 crore posted in Q3 FY25. Net sales (excluding excise duty) rose 5.18% YoY to Rs 1,18,999.37 crore in the December 2025 quarter.

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