Trump’s ‘good deal’, receding geo-political tensions trigger Nifty, Sensex turnaround

Sensex, Nifty snap three day losing streak

• Indian markets rose after Trump's positive stance on India and easing trade tensions
• Sensex rose 761.50 points, Nifty up 237.65 points; all sectors traded higher
• US to refrain from imposing tariffs on Europe, easing fears of a trade war

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After three consecutive sessions of losses, the Indian equity markets staged a sharp rebound rally in trade on Thursday, January 22, as U.S. President Donald Trump's softening stance on Greenland, a trade war with the E.U, and his optimism on India supported local sentiment.

In an exclusive conversation with Moneycontrol yesterday, following his address at the 56th Annual Summit of the World Economic Forum, Trump struck an optimistic tone on India-U.S. trade negotiations. “I have great respect for your Prime Minister. He’s a fantastic man and a friend of mine. We are going to have a good deal,” the US President said.

Additionally, the U.S. President moderated his views on annexing Greenland, suggesting that he would not acquire the territory through force. Instead, he agreed to a "framework of a future deal." He also walked back his decision to impose tariffs on the E.U., thus alleviating concerns of a trade war between the European bloc and America.

"Based upon this understanding, I will not be imposing the tariffs that were scheduled to go into effect on February 1st," he wrote on Truth Social.

The markets celebrated this development sharply. At 10 a.m., the Sensex was up 761.50 points or 0.93 percent at 82,671.13, and the Nifty was up 237.65 points or 0.94 percent at 25,395.15. All sectors traded in a sea of green, rallying between 1-2 percent, while the broader markets outperformed.

According to VK Vijayakumar, Chief Investment Strategist, Geojit Investments, the gains came following another TACO case (Trump Always Chickens Out).

"More importantly, the message that the US would “refrain from imposing tariffs on Europe” takes away the threat of a US - Europe trade war which was dragging the markets down," said Vijayakumar. "The consequent relief rally in the market today can be significant since there are about 2 lakh short contracts in the market and the market construct is right for short-covering."

However, certain analysts did caution that the "overall sentiment remains fragile amid persistent foreign fund outflows, currency weakness, and subdued risk appetite."

Global markets also staged a sharp rally overnight. The U.S. markets ended sharply higher, with the Dow Jones Industrial Average jumping 588.64 points, or 1.21 percent, to close at 49,007.23. The S&P 500 rose 1.16 percent to 6,875.62, while the Nasdaq Composite gained 1.18 percent to finish at 23,224.82.

Analysts and market experts will also be watching the ongoing earnings season for further cues. As most experts consider current market valuations on the lofty side, markets are hoping for positive earnings growth to justify the premium multiples.

However, in a note, international financial services firm UBS said, "We remain underweight on India despite a stark underperformance compared to EM in 2025; on current weak nominal GDP growth trend, 2) MSCI India's fundamentals tracking weaker than the rest of EM, and a lack of clear AI beneficiaries in the listed space. Valuation premiums are still higher than usual."

A ray of hope emerges from the upcoming FTA (free-trade agreement) between EU and India. Indian equity markets are likely to view the much anticipated India–European Union free trade agreement (FTA) as a positive sentiment trigger rather than a structural game-changer, with select sectoral opportunities across textiles, services, manufacturing, aviation and pharmaceuticals, experts suggest.

Watch U.S. President Donald Trump's exclusive byte to Moneycontrol here:

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