Markets likely to make cautious start on Tuesday

Indian markets are likely to make cautious start on Tuesday as traders may remain cautious ahead of the weekly F&O expiry. Investors are likely to remain worried as Foreign Institutional Investors (FIIs) maintained their selling pressure on Indian equities on January 19, recording net outflows of Rs 3,263 crore.  

Some of the key factors to be watched:

IMF raises India GDP growth forecast to 7.3% for FY26: The International Monetary Fund (IMF) in its latest report raised India's growth projection to 7.3 per cent for fiscal 2025-26, up 0.7 percentage point from its October forecast, on the back of better-than-expected performance of the economy. 

India to be upper-middle income country by 2030: State Bank of India (SBI) in its research report said that India is set to transition to 'upper-middle income' country in next four years in 2030, joining the ranks of China and Indonesia, and become the third largest economy even earlier in 2028.

India, UAE deepen ties with mega defence plan: India and the United Arab Emirates have unveiled plans to have a strategic defence partnership and sealed an LNG deal as Prime Minister Narendra Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan set a $200 billion annual trade target by 2032 while laying out a broad agenda to shore up the ties.

Piyush Goyal meets US Ambassador Sergio Gor, Senator Steve Daines: Commerce and Industry Minister Piyush Goyal met the US Ambassador to India, Sergio Gor, and American Senator Steve Daines and discussed bilateral issues.

India and the European Union to meet next week: India and the European Union are set to announce the conclusion of a free trade agreement, firming up of a defence partnership pact and a framework for mobility of Indian professionals at the summit talks next week. 

On the global front: The US markets were closed on Monday on account of the Martin Luther King Jr. Day holiday. Asian markets are trading mostly in red on Tuesday as rising geopolitical and trade tensions in the dispute over Greenland continue to trigger a risk-off mood across global markets.

Back home, Indian equity benchmarks ended lower on Monday, tracking deep losses in heavyweights Reliance Industries, Eternal, and ICICI Bank amid global tariff uncertainties. Besides, weakness in the rupee and unabated flight of foreign capital from Indian equities also made investors jittery. Finally, the BSE Sensex fell 324.17 points or 0.39% to 83,246.18 and the CNX Nifty was down by 108.85 points or 0.42% to 25,585.50.    

Some of the important factors in trade:

Moody’s forecasts 7.3% India’s GDP growth in FY26: Moody's Ratings has projected India to clock a 7.3 per cent growth in FY26, and said the strong economic expansion would support average household incomes and stimulate demand for insurance protection.

India’s merchandise exports likely to come under pressure: Crisil Ratings’ report has warned that India’s merchandise exports are likely to face strong headwinds due to uncertainty persists over India's trade negotiations with the US and concerns grow over further US tariffs on Russian crude oil purchases. 

GTRI suggests overhaul of import tariff structure, customs administration: In order to reduce trade costs, strengthen manufacturing competitiveness and revive export growth, the think tank GTRI has suggested an overhaul of Indian import tariff structure and customs administration.