Benchmarks likely to make cautious start on Thursday

05 Feb 2026 Evaluate

Indian equity markets are likely to make cautious start on Thursday as fears over AI-led disruption countered investor optimism surrounding the U.S.-India trade deal. Sentiments may remain subdued as the focus shifts to Friday’s RBI interest rate announcement. However, investors may take support with exchange data showed Foreign Institutional Investors purchased equities worth Rs 29.79 crore on Wednesday.

Some of the key factors to be watched: 

India will lower tariffs on vast array of US industrial, agricultural goods to zero per cent: US Trade Representative Jamieson Greer said India will lower tariffs on a vast array of American industrial and agricultural goods, such as fruits and vegetables, to zero per cent under the trade deal announced by President Donald Trump.

India must grow faster and increase its share in global trade: Former NITI Aayog vice-chairman Rajiv Kumar has said that a robust economy forms the foundation of a strong foreign policy and India must grow faster and increase its share in global trade to gain respect on the world stage.

India, GCC to ink terms of reference on Feb 5 for starting FTA talks: India and the six-nation bloc of Middle Eastern nations, the Gulf Cooperation Council (GCC), will ink terms of reference on February 5 for starting talks for a free trade agreement (FTA).  

88% taxpayers opt for new tax regime: CBDT Chairman Ravi Agrawal has said that as many as 88 per cent of individual taxpayers have moved to the new tax regime and the government is not thinking of bringing in a sunset clause for filing income tax returns under the old regime. 

GeM procurement crosses Rs 4 lakh crore: GeM CEO Mihir Kumar said the procurement of goods and services from the Government e-Marketplace (GeM) has crossed Rs 4 lakh crore so far this fiscal with over 50 lakh buying and selling orders by various ministries and departments.  

On the global front: US markets ended mostly in red on Wednesday as traders continued to rotate out of the tech sector, with semiconductor stocks showing a substantial move to the downside. Asian markets are trading mostly in red on Thursday as software stocks followed their U.S. peers lower on fears over artificial intelligence affecting future business growth. 

Back home, Indian equity benchmarks traded within narrow range throughout the session and ended marginally higher on Wednesday as a sharp decline in IT blue-chip stocks restricted the rally in the markets. Sentiments remained subdued as the focus shifts to Friday’s RBI interest rate announcement. Finally, the BSE Sensex rose 78.56 points or 0.09% to 83,817.69 and the CNX Nifty was up by 48.45 points or 0.19% to 25,776.00.    

Some of the important factors in trade:

India services sector growth hits 2-month high: The seasonally adjusted HSBC India Services PMI Business Activity Index rose to a two-month high of 58.5 in January, from December's recent low of 58.0, mainly driven by demand buoyancy, new business gains and tech investment.

India-EU FTA undergoing legal scrubbing; likely to enter into force this year: EU Ambassador to India Herve Delphin has said India-European Union free trade agreement is currently undergoing legal scrubbing and both sides are committed to concluding the process swiftly for its signing and coming into force, possibly this year.  

Tariff cut by US augurs well for Indian exports: After US President Donald Trump's decision to slash tariffs on Indian goods to 18 per cent, Finance Minister Nirmala Sitharaman has expressed optimism that this move is a positive development for India as it will boost exports along with having found new markets where they will continue to operate.

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