Markets rebound on RBI liquidity push; tech concerns, budget anticipation keep traders cautious 

Indian equity benchmarks opened higher on Tuesday morning, rebounding from Monday’s sell-off, as the Reserve Bank of India’s liquidity-boosting measures lifted sentiment amid mixed global cues and ongoing concerns about US tech valuations following Chinese AI developments.

The Sensex opened higher at 75,659.00 compared to its previous close of 75,366.17 and is currently trading at 75,714.06, up by 347.89 points or 0.46 per cent. Similarly, the Nifty opened at 22,960.45 against its previous close of 22,829.15 and is now at 22,908.75, gaining 79.60 points or 0.35 per cent. The positive start came after RBI announced plans to purchase government securities worth ₹60,000 crore through open market operations and conduct a $5-billion USD/rupee swap auction.

“The RBI’s announcement of measures to boost liquidity in the banking system by around ₹1.5 trillion is positive for the market. This raises the prospects of a rate cut by the MPC in the February policy meeting,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

However, Rajeev Radhakrishnan, CIO – Fixed Income at SBI Mutual Fund, cautioned: “It could possibly be hasty to build in rate cut expectations in the February review as the broader growth inflation mix does not unambiguously call for the same. The April review possibly remains a better bet.”

Banking stocks led the gains with Axis Bank (+2.12 per cent), HDFC Bank (+2.10 per cent), and ICICI Bank (+1.96 per cent) among the top gainers. On the flip side, Sun Pharma (-4.38 per cent), NTPC (-3.00 per cent), and Hindalco (-2.97 per cent) were the major losers.

“Yesterday’s trading session saw bearish sentiment dominate Dalal Street, with Nifty closing well below the 23,000 mark,” noted Prashanth Tapse, Senior VP (Research) at Mehta Equities, citing global headwinds and FII outflows of ₹74,096 crore in January.

Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth ₹5,015 crore on January 28, while Domestic Institutional Investors purchased shares worth ₹6,642 crore.

Vikas Jain, Head of Research at Reliance Securities, highlighted that “the US market ended a mixed bag, while Nasdaq dropped 3 per cent led by AI stocks (both NVIDIA and Oracle Finance declined 15 per cent each)“ after Chinese startup DeepSeek’s announcement of a cost-efficient AI model.

“The IT sector is predicted to remain under pressure due to the developments around DeepSeek and the general weakness in global tech sentiment,” said Ameya Ranadive, Senior Technical Analyst at StoxBox.

VLA Ambala, Co-Founder of Stock Market Today, pointed out that the “Nifty slumped by nearly 13 per cent from its all-time high” over recent months, while noting that “India’s sunrise sectors, such as green energy and semiconductors, are experiencing global challenges that could hamper company margins.”

On the technical front, Shrikant Chouhan, Head of Equity Research at Kotak Securities, advised: “The strategy should be to reduce weak long positions around 23000-23050 levels; however, if it falls to 22600 during the week, we should look to buy select stocks with a medium to long-term view.”

Sameet Chavan, Head Research at Angel One, added: “Since we are about to enter a crucial and major support zone of 22800-22400, we would change our stance from bearish to cautious now.”

Hardik Matalia, Derivative analyst at Choice Broking, said “Nifty can find support at 22,800, followed by 22,650 and 22,500,” while resistance levels were seen at “23,000 followed by 23,100 and 23,200.”

Market participants are now focused on two major events: the Federal Reserve’s two-day meeting beginning today and India’s Union Budget 2025 scheduled for February 1. The India VIX, reflecting market volatility, traded higher at 18.13, up 8.29 per cent from the previous session.

In earnings, Coal India reported a 17 per cent decline in Q3 net profit to ₹8,505.57 crore. Companies scheduled to announce results today include Bajaj Auto, Hindustan Zinc, Hyundai Motor, Cipla, and TVS Motor.

Global markets showed mixed trends as gold declined 1.5 per cent to near $2,742 an ounce and Brent crude slipped 2 per cent to $77/bbl after U.S. President Donald Trump threatened to impose extensive tariffs on imports, including key industrial commodities.