Markets likely to make cautious start on Wednesday

Indian equity benchmarks are likely to get a cautious start on Wednesday tracking weak global cues. Traders may remain cautious ahead of Q3 earnings from some blue-chip companies. However, investors may take support with exchange data showed Foreign Institutional Investors took a U-turn from selling and purchased equities worth Rs 5,236.28 crore on Tuesday. 

Some of the key factors to be watched:

India-US trade deal a very exciting opportunity: US Trade Representative Jamieson Greer said India has agreed to reduce tariffs on a variety of agricultural products, manufactured goods and chemicals and he described the bilateral trade deal as an exciting opportunity for both countries.

India's exports to get boost with US cutting tariff: Finance Minister Nirmala Sitharaman has said that US President Donald Trump's decision to slash tariffs on Indian goods to 18 per cent augurs well for the country as it will boost exports. 

RBI to start 3-day deliberations on interest rate: The Reserve Bank's rate-setting panel will start its three-day brainstorming for the next bi-monthly monetary policy on Wednesday in the backdrop of growth-focused Union Budget, low inflation and more recently the long-awaited India-US trade deal ending prolonged uncertainty on the external front. 

India-EU FTA likely to come into force this year: EU Ambassador to India Herve Delphin has said that the India-EU Free Trade Agreement (FTA) is now undergoing legal scrubbing and both sides are committed to concluding the process swiftly for its signing and coming into force, possibly this year. 

Airline stocks will be in watch: Data released by aviation regulator Directorate General of Civil Aviation (DGCA) showed domestic air traffic rose over 3 per cent to 16.69 crore in 2025, while the number of people who flew in domestic airlines fell to 1.43 crore in December. 

On the global front: US markets ended in red on Tuesday due to a rotation out of technology stocks, as reflected by the steep drop by the Nasdaq. Asian markets are trading mixed on Wednesday following the broadly negative cues from Wall Street overnight

Back home, Indian equity benchmarks experienced a significant rally and ended with gains of over two and half percent on Tuesday, driven by the long-anticipated India-US trade deal and a strengthening rupee, which boosted expectations of renewed FII inflows. Finally, the BSE Sensex rose 2072.67 points or 2.54% to 83,739.13 and the CNX Nifty was up by 639.15 points or 2.55% to 25,727.55.   

Some of the important factors in trade:

US tariff reduction on Indian goods positive for labor-intensive sectors: Moody's Ratings said the reduction of the US tariff rate on most Indian goods is credit positive for labour-intensive sectors such as gems, jewellery, textiles and apparel, which are the top export sectors. 

Lower tariffs under India-US trade pact to aid engineering exports: EEPC India has welcomed the announcement of a trade deal with the US under which Washington will lower reciprocal tariff on Indian goods to 18 per cent from the current 25 per cent, and said it could significantly boost engineering shipments.

Budget focusses on investment as tool for growth: Finance Minister Nirmala Sitharaman said the Union Budget for FY27 has focussed on investment as a priority tool for boosting consumption, and the trajectory of fiscal deficit shows that the government’s priority is growth.