Indian benchmark equity indices extended their upward momentum on Wednesday, buoyed by positive sentiment surrounding the recently announced India European Union Free Trade Agreement and growing anticipation ahead of the Union Budget. The rally followed a strong close in the previous session, reflecting renewed investor confidence in India’s long term economic outlook.
In early trade, the BSE Sensex surged 646.49 points to reach 82,503.97, while the NSE Nifty climbed 196.70 points to 25,372.10. The gains were broad based, with banking, infrastructure, and capital goods stocks emerging as key contributors to the upward movement.
Among the top gainers on the Sensex were Axis Bank, Reliance Industries, NTPC, Bharat Electronics, ICICI Bank, and Bajaj Finance. These stocks benefited from expectations of improved trade prospects, increased capital inflows, and potential policy support in the upcoming Budget.
However, the rally was not uniform across all sectors. Asian Paints witnessed a sharp decline of nearly six percent after reporting a year on year fall of 4.83 percent in consolidated net profit for the December quarter of financial year 2026. The company cited exceptional expenses related to the implementation of the new labour code and impairment losses in a subsidiary as key reasons for the decline. Other stocks that traded lower included Maruti Suzuki, HCL Technologies, Kotak Mahindra Bank, and State Bank of India.
Market sentiment was further boosted by the announcement of the India EU Free Trade Agreement, described by officials as a landmark deal with far reaching economic implications. The agreement aims to create one of the world’s largest trade blocs, covering a combined market of nearly two billion people. According to official estimates, the pact will reduce tariffs on 99 percent of Indian exports to the European Union and lower duties on over 97 percent of EU exports to India. The agreement is expected to significantly enhance trade flows, investment opportunities, and strategic cooperation between the two regions.
Despite the positive domestic cues, foreign institutional investors continued to remain net sellers. On Tuesday, foreign investors offloaded equities worth Rs 3,068.49 crore. In contrast, domestic institutional investors stepped in aggressively, purchasing shares worth Rs 8,999.71 crore, providing crucial support to the markets.
Asian markets presented a mixed picture. Indices in South Korea, Shanghai, and Hong Kong traded higher, while Japan’s Nikkei index edged lower. US markets ended mostly higher overnight, offering additional support to global risk sentiment. Meanwhile, Brent crude prices rose modestly to USD 67.92 per barrel.
Market experts believe that while the India EU trade agreement is a strong long term positive, investor focus has now firmly shifted to the Union Budget scheduled to be presented on February 1. Expectations are high for measures that support growth, boost consumption, and provide clarity on fiscal consolidation.
