Share Market Today: Trade Deal Buzz Ignites Stock Market: Is a Real Rally on the Horizon?

The solid recovery witnessed in the Indian stock market on Monday has once again rekindled hopes among investors. Market experts believe that positive news regarding a trade deal with the United States could emerge in the coming days, providing further impetus to the market, while Also, the anticipated entry of Venezuelan oil into the global market is expected to benefit India by potentially lowering crude oil prices. These, among several other factors, are poised to create a strong bullish momentum in the stock market.

US Ambassador's Positive Remarks and Market Surge

The positive comments made by the US Ambassador to India regarding the trade deal offered a significant buying opportunity for investors, while following these remarks, the Sensex closed over 1000 points higher from its day's low on Monday, while the Nifty also managed to close with a gain of more than 100 points. There was a point when it seemed the stock market would continue its downward trend for the sixth consecutive day, with the Sensex dipping below the 83,000 mark. However, these two crucial pieces of positive news played a vital role in bringing the stock market back on track, while this incident underscores the profound impact global cues can have on the Indian market sentiment.

Global and Domestic Factors: Shaping Market Direction

Currently, the stock market is approximately 2300 points below its peak, but the recent rally has provided some significant indications for the future. Market experts suggest that it doesn't take long for a bullish sentiment to build in the stock market, especially when global factors are favorable. At present, the stock market is primarily being triggered by external factors, including the potential trade deal with the US, easing geopolitical tensions, stable or falling crude oil prices, and the outflow of foreign institutional investors (FIIs) from the Indian market, while these factors directly influence market sentiment and investor confidence.

Strong Domestic Economic Indicators

On the other hand, there are no major domestic reasons that would lead to a decline in the stock market. Tax collection figures in the country have been quite encouraging, reflecting the strength of the economy. Inflation data has also shown stability, remaining below the Reserve Bank of India's (RBI) tolerance level. From GST collection to other key economic indicators, all are performing well, highlighting the solid foundation of the domestic economy, while barring manufacturing and a few other selected indicators, the overall situation is quite favorable. So, if there is some improvement in global sentiment, the pace of the stock market could accelerate further. Let's dive into deeper into how the stock market might perform in the coming days.

Improved Inflation Figures

Currently, the country's inflation figures are in a much better state, which is a positive sign for the market. The retail inflation data released on January 12 tells a similar story, while according to the figures, retail inflation in the country was recorded at 1. 33 percent, which is the highest in three months, while however, the most crucial aspect is that these figures are still below the RBI's tolerance level. This marks the 11th consecutive month that the country's inflation rate has remained below the RBI's prescribed tolerance level, which is a very positive signal for the stock market. This positive impact is likely to be seen in the stock market on Tuesday as well, as. A lower inflation rate provides the central bank with room to adopt a softer stance on interest rates.

Excellent Tax Collection Growth

The tax collection figures released on January 12 also showed a very strong performance, while according to government data, net direct tax collection witnessed an impressive increase of 9 percent, crossing the 18 lakh crore rupee mark. The government's target for the current fiscal year is 25 lakh crore rupees. These figures are quite good as domestic triggers for the stock market. Experts suggest that with the fiscal year ending in the next two to two and a half months, this target can be easily achieved, while Also, the reduction in refunds should make it easier to meet this target. This indicates the strength of government revenue and an improvement in economic activities.

Positive Discussions on Trade Deal

The signals given by Sergio Gor, the US Ambassador and considered close to US President Trump, regarding the trade deal are largely positive for India. He clearly stated that India is very important for the US, and as the world's largest country, a trade deal between the US and India is bound to happen. He also mentioned that both countries are continuously working towards this and will soon reach a conclusion. What's more, the US President might visit India in the next two years. President Trump and Prime Minister Narendra Modi are considered to be good friends, so there is no question of any sourness between the two nations. This is why the stock market sentiment was very positive on. Monday, and it's expected to remain so in the coming days.

Potential Announcements in the Budget

On the other hand, the budget for the fiscal year 2027 is scheduled to be presented on Sunday, February 1. It's anticipated that this budget will focus Notably on GDP growth, government expenditure, the manufacturing sector, and Artificial Intelligence (AI). According to information, the central government may also announce a new scheme under the Public-Private Partnership (PPP) model, involving the private sector alongside the government to accelerate infrastructure development. This is very positive news for the stock market, as it will boost economic activities. On top of that, the country's Capex (capital expenditure) is estimated to be between 15 to 20 lakh crore rupees this year, which will drive investment and growth.

Potential Decline in Crude Oil Prices

Recently, due to tensions between Iran and the US, crude oil prices saw a significant surge, crossing $63 per barrel, while however, in the coming days, Brent crude oil prices are likely to fall below $60 per barrel. The main reason for this is the expected supply of Venezuelan. Crude oil into the market, which is currently under US control. Experts suggest that the entry of Venezuelan oil supply into the market will lead to a reduction in crude oil prices. By June or July, crude oil prices could fall not only below $60 but even below $55 per barrel, while this would be a significant relief for an oil-importing country like India, helping to control inflation and reduce the trade deficit.

Potential Interest Rate Cuts

Towards the end of the month, the US central bank, the Federal Reserve, is scheduled. To hold an important meeting, where a 25 basis point interest rate cut is anticipated. This is positive news for India, as it would lead to a decrease in the dollar index and strengthen the Indian Rupee. A stronger rupee makes imports cheaper and can attract foreign investment into the stock market, while although current inflation figures are above the Fed's tolerance level of 2 percent, the Fed is quite aggressive regarding the growth of the US economy, which aligns with President Trump's thinking. While the Fed Reserve Chairman had stated in the previous policy meeting that only. One rate cut might occur in 2026, US economic indicators point towards another rate cut. Meanwhile, the RBI may also implement a 25 basis point cut in its last MPC meeting of the current fiscal year and the first of the calendar year, which is quite positive for the stock market.

The Sole Concern: Outflow of Foreign Investors

Recently, the government released fresh estimates for economic growth, projecting the country's Gross Domestic Product (GDP) to be 7, while 4 percent in the current fiscal year. This is 90 basis points higher than the previous fiscal year, which is very positive for both the country and the stock market. According to experts, GST reforms could further revise the estimated GDP figures. It's possible that this figure could reach close to 8 percent, surprising not only India but the entire world. In such a scenario, the stock market could once again. Skyrocket, as strong economic growth boosts corporate earnings and investor confidence.

Anuj Gupta, Director at Y Wealth, states that very positive sentiments are building for the stock market in the coming days, which began with Sergio Gor's statement on Monday. However, despite all these positive signals, one concern still persists, and that's the outflow of foreign investors from the Indian market. He noted that even after the spectacular recovery of the stock market. On Monday, foreign investors sold more than 3600 crore rupees from the market. In the current month, they've already sold over 15,400 crore rupees. Anuj Gupta further added that if positive news on the trade deal emerges soon, this outflow could stop,. And the stock market could witness a bumper rally, as foreign investment is crucial for market liquidity and depth.