Global Factors and Geopolitical Developments
Market participants continued to track global political and economic developments, particularly from the United States. According to market experts, geopolitical tensions and trade-related statements from US President Donald Trump remain a key overhang for global markets. Recent remarks on the continued use of tariffs as a strategic tool have raised concerns about disruptions to global trade flows.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that the “weaponisation of tariffs” by the US administration has already impacted several economies. He added that such unpredictable policy actions, including pressure on domestic institutions, could keep global markets volatile in the near term.
India-US Trade Talks Offer Near-Term Support
From an Indian market perspective, hopes surrounding a potential India-US trade agreement provided some relief to investors. Markets had reacted positively a day earlier after the US ambassador indicated that Washington remains committed to pursuing a trade deal with India, with discussions expected to resume as early as January 13.
Analysts believe that any concrete progress on bilateral trade could help cushion Indian equities against external shocks. However, they also caution that clarity will emerge only after formal negotiations resume and tangible outcomes are announced.
Q3 Earnings Season Takes Centre Stage
With the December quarter earnings season getting underway, investors are increasingly focusing on company-specific fundamentals. Market experts expect earnings results to drive sectoral and stock-level movements over the coming weeks, rather than broad-based rallies.
Banking, information technology and consumer-facing companies are likely to remain in focus, as investors assess demand trends, margin pressures and management outlooks. Any earnings surprises could lead to sharp reactions in individual stocks.
Global Markets and Currency Trends
Overnight, US equities ended Monday’s session on a strong note, with both the S&P 500 and the Dow Jones Industrial Average closing at record highs. Gains were led by technology stocks and retail major Walmart, as investors largely looked past concerns related to a criminal probe involving the US Federal Reserve Chair.
Asian markets followed suit on Tuesday, with several indices trading close to record levels. Optimism around corporate earnings and improving regional growth prospects supported sentiment across the region.
In currency markets, the US dollar remained under pressure amid renewed concerns over the independence of the Federal Reserve. This development prompted investors to reassess confidence in US assets, adding another layer of complexity to global financial markets.
FII and DII Activity
Data on institutional flows showed mixed participation. Foreign portfolio investors (FPIs) were net sellers of Indian equities worth Rs 3,638 crore on Monday. In contrast, domestic institutional investors (DIIs) provided crucial support by purchasing shares worth Rs 5,839 crore, helping offset foreign outflows.
Market watchers note that sustained domestic inflows continue to act as a stabilising force for Indian equities, particularly during periods of global uncertainty.
Outlook for the Day
Looking ahead, analysts expect Indian markets to remain cautious yet resilient. While global cues and geopolitical headlines may influence sentiment, the focus is likely to stay on earnings announcements and domestic economic indicators.
Investors are advised to monitor developments related to global trade, currency movements and institutional flows, while maintaining a selective approach towards fundamentally strong stocks.
