Weekly Market Wrap: 5 Key Themes That Defined the Last Week of January 2026

The last week of January 2026 was packed with major global and domestic developments that shaped market sentiment. From a landmark India–EU trade deal to sharp swings in commodities and steady central Bank signals, investors navigated a mix of optimism and caution.

India–EU FTA and Global Cues
India and the European Union concluded their long-pending Free Trade Agreement on January 27, 2026, marking a significant step in strengthening trade relations and supply-chain cooperation. Globally, the U.S. Federal Reserve kept the federal funds rate unchanged at 3.50–3.75 per cent in its January 2026 meeting, signalling a wait-and-watch, data-driven approach amid easing but still elevated inflation. Meanwhile, renewed uncertainty emerged after Donald Trump indicated his intent to nominate former Fed Governor Kevin Warsh as the next Federal Reserve chair.

Economic Survey and Macro Signals
The Economic Survey 2025–26 highlighted strong domestic growth and low inflation, while urging bold reforms to navigate global trade disruptions, geopolitical tensions, and currency risks ahead of Union Budget 2026. The Survey projected India’s GDP growth for FY27 at 6.8–7.2 per cent, reinforcing confidence in the medium-term outlook.

Market Performance: Indices Recover
Indian equity markets ended the week firmly in the green. The Nifty 50 gained 1.09 per cent, logging its highest weekly trading volume of 228 crore shares in eight months, while the Sensex rose 0.9 per cent. Bank Nifty outperformed with a 1.95 per cent gain. Broader markets saw stronger traction, with the Nifty Midcap 100 up 2.25 per cent and the Nifty Smallcap 100 rising 3.22 per cent, indicating improved risk appetite.

Currency and Commodity Volatility
The Indian rupee touched the 92 mark against the U.S. dollar during the week and ended January at 91.98, marking its worst month since September 2022 due to persistent foreign outflows and strong dollar demand. In commodities, gold made headlines by briefly crossing USD 5,000 per ounce for the first time amid geopolitical risks and U.S. fiscal concerns. However, on January 30, gold witnessed its sharpest single-day fall in decades, while silver plunged close to 30 per cent after a sharp rally in the U.S. dollar triggered a sell-off in bullion.

Supportive and Dragging Factors
Supportive trends included the India–EU FTA, steady U.S. Fed policy, optimistic signals from the Economic Survey, and a sharp rally in Defence stocks. The Nifty Defence Index surged 8.8 per cent for the week, its biggest gain since May 2025, driven by expectations of higher defence spending ahead of the February 1 Budget and evolving geopolitical dynamics.
On the flip side, Nifty IT and FMCG indices closed the week in negative territory. FIIs remained net sellers, offloading shares worth over Rs 2,982 crore between January 27 and January 29. Metal stocks faced heavy selling on the final trading day due to weak global commodity prices, a stronger U.S. dollar, and uncertainty surrounding the next U.S. Fed chair.

U.S. Market Snapshot
U.S. equity markets ended the week mixed. The Dow Jones Industrial Average fell 0.42 per cent, the Nasdaq declined 0.17 per cent, while the S&P 500 managed a modest gain of 0.34 per cent. Inflation worries resurfaced after December producer price data came in above expectations, keeping investors cautious.

Sectoral Trends
On the sectoral front, Nifty Energy rose 6.16 per cent, supported by higher crude oil prices. Nifty Metal gained 3.05 per cent for the week despite a sharp late-week correction. Nifty IT slipped 0.53 per cent, tracking weakness in U.S. technology stocks.

Derivatives and Technical View
In the futures and options space, the Nifty 50’s max pain stood at 25,500 with a Put–Call Ratio of 1.12, while Bank Nifty’s max pain was at 60,000 with a PCR of 0.97. Open interest data suggested strong support for Nifty around 25,000 and resistance near 25,500. India VIX cooled to 13.63, down 3.95 per cent on a weekly basis, indicating easing volatility. Technically, the Nifty continued to hold above its 200-day moving average, a key long-term support.

What Lies Ahead
The upcoming week is crucial, with the Union Budget 2026 scheduled for February 1, followed by the Bank of England’s interest rate decision on February 5 and U.S. non-farm payroll and unemployment data on February 6. Key earnings to watch include State Bank of India, MRF, Suzlon Energy, Life Insurance Corporation of India, Hindustan Copper, Hero MotoCorp, Tata Power Company, and Bajaj Finserv, where stock-specific action is expected based on results.

Bottom Line
Despite currency pressure and global uncertainty, Indian equities showed resilience in the last week of January 2026. Strong domestic fundamentals, supportive policy signals, and broad-based recovery in mid and small caps helped markets recover from the previous week’s sell-off, setting the stage for a high-stakes Budget-driven week ahead.

Disclaimer: The article is for informational purposes only and not investment advice.