Sensex settles 300 pts higher, Nifty ends above 25,150: India-EU trade deal among key factors behind market rise

Shares rise in trade.

The equity benchmark indices Sensex and Nifty rebounded sharply from early lows and settled higher on Tuesday, tracking firm global cues and optimism surrounding the India-European Union trade deal.

The Sensex climbed 319.78 points, or 0.39 percent, to settle at 81,857.48. During the day, it hit a high of 82,084.92 and a low of 81,088.59. The Nifty surged 126.75 points or 0.51 percent to end at 25,175.40.

Axis Bank, Adani Ports, UltraTech Cement, Bharat Electronics, Tata Steel, NTPC, State Bank of India and Tech Mahindra were among the biggest gainers in the Sensex pack. Axis Bank climbed over 4 percent after the firm reported a 4 percent growth in its December quarter net profit. However, Kotak Mahindra Bank dropped over 4 percent after its third quarter earnings failed to cheer investors.

Key factors behind market rise

1) India-EU trade optimism: Optimism over the India-European Union trade deal lifted sentiment, as investors expect the agreement to boost exports, improve market access for Indian companies and strengthen long-term economic ties, supporting growth prospects.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, "From a sentiment perspective, the announcement regarding the EU-India FTA is a positive. But the FTA will become operational only from 2027 onwards and, therefore, from the fundamental perspective, the announcement is unlikely to be a trigger for a market rally."

2) Rupee rises: The rupee recovered from record low levels, which aided domestic equities. The local currency gained 10 paise to trade at 91.80 against the US dollar in early deals on Tuesday, as the dollar index eased from elevated levels. At the interbank foreign exchange, the rupee opened at 91.80, up from its previous close of 91.90. On Friday, the rupee had touched a historic low of 92 per dollar.

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3) Positive global trends: A firm trend in global markets further supported sentiment. In Asian trade, South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng indices were trading higher. US markets ended on a positive note on Monday.

4) Crude declines: Crude oil prices softened, which also lent support to equities. Brent crude, the global oil benchmark, slipped 0.72 percent to USD 65.12 per barrel. Lower crude prices ease inflationary pressures and improve India’s trade balance, which is positive for the economy and markets.

5) Hopes of reduction in US tariffs: Investors took note of comments suggesting a possible reduction in US tariffs on India. US Treasury Secretary Scott Bessent said at Davos on Friday that the additional 25 percent tariffs on India could be removed, citing a decline in India’s purchases of Russian oil.

6) RBI liquidity measures: The liquidity measures announced by the Reserve Bank of India added to positive sentiment. The RBI on Friday unveiled steps to inject over USD 23 billion into the banking system through bond purchases, buy-sell forex swaps and repos. Higher liquidity is seen as supportive for credit growth and equity markets.

Technical View

Aakash Shah, Technical Research Analyst at Choice Broking, said the Nifty remains below its short-term moving averages, indicating a fragile setup.

"The 25,200–25,300 zone is immediate resistance, and any pullback towards this area may invite selling pressure. On the downside, 25,000 remains a key psychological and technical support. A decisive break below this level could accelerate weakness towards the 24,950–24,900 region in the near term," Shah said.

He added that momentum indicators remain subdued, though oversold conditions may lead to brief, stock-specific relief rallies.

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