Markets Snap 3-Day Losing Streak — Sensex Jumps 398 Points as Trump Trade Comments Lift Sentiment

Market rebounds with a twist: Sensex jumps 398 points, Nifty nears 25,300 as Trump’s remarks revive risk appetite

Index	Price	Change	% Chg
Nifty 50	25,289.90	132.40	+0.53%
Nifty Bank	59,200.10	399.80	+0.68%
Nifty Financial	27,149.95	186.45	+0.69%
BSE SENSEX	82,307.37	397.74	+0.49%

Indian equity markets finally found some breathing room on Thursday after three bruising sessions, but the rebound has left investors asking a deeper question: Is this the start of a durable recovery or just another short-lived relief rally?

The Sensex closed 398 points higher, while the Nifty 50 settled near the 25,300 mark, snapping a three-day losing streak that had wiped out nearly ₹14 lakh crore in investor wealth. Positive global cues, easing geopolitical fears and renewed hope around an India–US trade deal combined to lift sentiment — but the undertone of caution has not entirely disappeared.

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Here’s what happened today and why traders reacted

Markets opened sharply higher after global sentiment improved overnight. US President Donald Trump softened his stance on EU tariffs, ruled out force over Greenland, and signalled optimism on an India–US trade deal, triggering a global “risk-on” wave.

This led to:

• Aggressive short-covering across indices

• Buying in beaten-down large caps

• Rotation out of gold and silver ETFs

• Renewed participation in midcaps and smallcaps

As Gaurav Garg of Lemonn Markets Desk noted:

“Sentiment improved following Trump’s withdrawal of tariff threats and optimistic remarks on a potential India–US trade deal, which encouraged short-covering and risk-taking.”

Intraday, the Sensex surged over 800 points and Nifty reclaimed 25,400, before profit booking trimmed gains.

Market numbers that mattered today

By the close:

• Nifty 50: 25,289.90 (+0.53%)

• Sensex: 82,307.37 (+0.49%)

• Bank Nifty: 59,200.10 (+0.68%)

• India VIX: Down 3.12% to 13.35

• Market breadth:

  • Advancers: 2,344

  • Decliners: 849

• BSE Midcap: +1%

• BSE Smallcap: +1%

Investor wealth recovered sharply during the session, with total market capitalisation briefly jumping by ₹6.6 lakh crore to ₹460.6 lakh crore at the intraday peak.

Major company results and stock-specific action shaped sentiment

Top Gainers — Stocks That Outperformed Today

1. Dr Reddy’s Laboratories (DRREDDY) – +5.31%

2. Bharat Electronics (BEL) – +3.76%

3. Adani Enterprises (ADANIENT) – +2.76%

4. Adani Ports (ADANIPORTS) – +2.72%

5. Tata Steel (TATASTEEL) – +2.71%

Top Losers — Stocks That Underperformed Today

1. Eternal Limited (ETERNAL) – -2.47%

2. SBI Life Insurance (SBILIFE) – -1.48%

3. Titan Company (TITAN) – -1.40%

4. Eicher Motors (EICHERMOT) – -1.32%

5. Max Healthcare (MAXHEALTH) – -0.47%

Sectoral performance shows broad-based participation

Sectoral action confirmed that Thursday’s move was not narrow:

Top gaining sectors:

• Media (+2.39%)

• Pharma (+1.59%)

• Metal (+1.18%)

• FMCG (+1.12%)

• Auto (+0.89%)

Lagging sectors:

• Consumer Durables (-0.87%)

• Realty (-0.74%)

Midcap and smallcap indices snapping their losing streaks suggest that risk appetite is cautiously returning.

Why the market rose today: 7 key drivers investors closely tracked

Thursday’s rebound was not driven by a single trigger but by a confluence of global, macro, technical and sentiment-based factors that aligned after three weak sessions. Investors, traders and institutions reacted to the following developments:

1) Trump’s Greenland and EU tariff climbdown eased global risk fears
The strongest sentiment booster came from US President Donald Trump’s remarks at Davos, where he softened his stance on the Greenland issue and withdrew the threat of imposing fresh tariffs on European nations. This helped calm fears of a renewed global trade war, which had been a key reason behind the recent risk-off selling across global markets.

2) India–US trade deal optimism revived foreign sentiment
Trump’s comment that the US is likely to have a “good deal with India” revived optimism around bilateral trade negotiations. This triggered buying interest in export-linked sectors such as textiles, pharmaceuticals, specialty chemicals, and seafood exporters, which had been under pressure in recent sessions. Markets interpreted this as a potential medium-term positive for India’s external trade outlook.

3) Strong global cues triggered short-covering in Indian markets
Overnight gains in US equities and positive moves across major Asian markets such as Japan’s Nikkei and South Korea’s Kospi set the tone for Indian equities. This global rebound encouraged traders to unwind bearish bets, leading to aggressive short-covering, especially in index heavyweights and banking stocks.

4) Cooling India VIX reduced panic levels
The India VIX fell over 3 percent to 13.35, signalling that fear levels are easing. A declining volatility index typically encourages higher risk-taking by traders and improves confidence among short-term participants, which helped sustain buying interest through the session.

5) Rupee stabilisation supported risk sentiment
After touching record lows earlier in the week, the rupee stabilised near 91.50 against the dollar, offering relief to equity markets. A stabilising currency reduces pressure on foreign portfolio investors, particularly in sectors dependent on imports, and supports broader market sentiment.

6) Rotation out of gold and silver ETFs signalled risk-on behaviour
Gold and silver ETFs, which had seen strong inflows during the recent sell-off, corrected sharply on Thursday. This move was seen as investors rotating out of safe-haven assets and reallocating capital toward equities, a classic sign of improving risk appetite.

7) Broader market participation confirmed improving market breadth
Unlike recent sessions where gains were narrow, Thursday’s rally saw midcap and smallcap indices rising over 1 percent each, with advance–decline ratio strongly positive. This improvement in market breadth suggests that participation is expanding beyond just large-cap short-covering, which is a healthier sign for near-term market stability.

VK Vijayakumar of Geojit Investments explained:

“The market construct is ripe for short-covering. The relief rally is logical given the number of short contracts outstanding.”

Rupee stabilises, easing pressure on foreign investors

The Indian rupee recovered modestly to around 91.50 per dollar after touching record lows earlier in the week. Forex analysts noted that easing geopolitical tensions and improved equity sentiment supported the currency.

However, the USD-INR technical structure still suggests:

• Support near 91.10

• Resistance near 92.00

Currency stability remains critical for sustained FII participation.

Technical analysis signals caution despite rebound

From a chart perspective, the Nifty’s rebound is constructive — but not yet a confirmed trend reversal.

• Nifty has reclaimed the 200-day EMA near 25,150

• Formation of high-wave candles suggests volatility remains elevated

• Resistance lies near 25,300–25,500 zone

• Sustained breakout above 25,500 needed for stronger upside

• Failure could drag the index back to 24,900–25,000

Anand James of Geojit Investments noted that:

“The doji formation near the lower Bollinger band allows consolidation, but only a decisive move above 25,300 can open the path toward 25,470–25,580.”

Commodities reflect mixed demand trends

While equities bounced, commodities sent mixed signals:

• Aluminium futures slipped to ₹316.25/kg on weak spot demand

• Zinc futures eased to ₹313.55/kg

• Copper futures declined to ₹1,287.85/kg due to muted industrial demand

This suggests that while financial sentiment improved, physical demand recovery remains uneven.

Ban list highlights speculative pockets traders must watch

In the F&O segment, speculative positioning remains elevated in select stocks.

Stocks in ban list:

• BANDHANBNK

• SAMMAANCAP

Possible entrants include:
IRCTC, RVNL, IREDA, KAYNES, DIXON, GODREJPROP, NBCC, BHEL, MANAPPURAM, HUDCO, IRFC, MAZDOCK, NMDC, BIOCON, CDSL, MCX, JIOFIN, POLYCAB, WIPRO, OFSS and others.

This signals where leverage is building — a key risk zone for traders.

What this rally means for traders and long-term investors

For traders:

• Opportunity for short-term momentum plays

• But volatility remains high

• Strict stop-loss discipline is essential

For long-term investors:

• Relief rally does not yet equal trend reversal

• Stock-specific quality and earnings strength matter more than index direction

• Exporters, pharma, metals and select defensives are seeing renewed interest

The broader takeaway: sentiment improved, but conviction is still developing.

What investors should watch next

The sustainability of this rebound will depend on:

• Concrete progress on India–US trade negotiations

• Direction of FII flows

• Stability of the rupee

• Upcoming US macro data

• Union Budget expectations building toward February 1

• Earnings momentum across sectors

The market has bounced — but the next few sessions will determine whether this becomes a base for recovery or just another pause in a volatile phase.

• Nifty 50
• Bank Nifty
• Sensex

FAQs Markets Snap 3-Day Losing Streak

Q. Why do markets sometimes rally even when foreign investors continue selling?

Markets can still rise despite FII selling if domestic institutional investors (DIIs), retail flows, or global sentiment turn supportive. Often, short covering, bargain buying near technical supports, or positive geopolitical cues can overpower FII outflows in the short term.

Q. How do Trump’s tariff comments and global geopolitics actually affect Indian stock prices?

Global political developments impact risk sentiment. When investors fear trade wars or conflict, they move money from equities to safe assets like gold or bonds. This “risk-off” behaviour directly affects Indian markets through capital flows, currency movement and global index correlation.

Q. Why do midcap and smallcap stocks fall more sharply during market corrections?

Midcap and smallcap stocks carry higher valuation premiums and lower liquidity. During uncertain phases, investors exit these segments faster to reduce risk, which leads to deeper corrections compared to largecap stocks.

Q. Does a rising India VIX always mean the market will fall further?

Not necessarily. A rising VIX reflects higher volatility and fear, but it can also signal panic exhaustion. Historically, spikes in volatility often occur near short-term market bottoms, followed by technical rebounds.

Q. How should retail investors adjust portfolios during volatile market phases like this?

Rather than reacting emotionally, investors should:

• Avoid over-leveraging

• Focus on fundamentally strong stocks

• Use staggered buying (SIP-style accumulation)

• Maintain allocation to defensive assets like gold ETFs or largecaps

Volatility rewards discipline, not speed.

Q. Why do gold and silver often move opposite to equities during market stress?

Gold and silver act as safe-haven assets. When uncertainty rises (geopolitical tensions, currency weakness, trade wars), investors shift money from equities into precious metals, pushing metal prices higher while stocks weaken.

Q. How can investors differentiate between a real market recovery and a short-term relief rally?

A sustainable recovery usually shows:

• Strong volumes on up days

• Sectoral participation (not just a few stocks)

• Stability in rupee and bond yields

• Declining VIX

• Positive earnings upgrades