Indian equity benchmarks extended their gains for the second straight session and ended with gains of over half percent on Monday, driven by optimism over the India-US trade deal and robust buying in Consumer Durables, Realty and Basic Materials stocks. Some support also came as exchange data showed foreign institutional investors bought equities worth Rs 1,950.77 crore on Friday.

Some of the important factors in trade:

India gains trade edge over China in US: Commerce and Industry Minister Piyush Goyal said that Indian goods will have a competitive advantage in US markets compared to products from China and other competitor countries, which face higher levies, following the reduction in reciprocal tariffs to 18 per cent. 

Strong domestic demand, stable banking system to drive India’s growth at 6.4% in FY27: Moody's Ratings has projected India's GDP to grow at 6.4 per cent in FY2026-27, the fastest pace among G-20 economies, driven by strong domestic consumption, policy measures, and a stable banking system.

PSBs’ combined profit likely to cross Rs 2 lakh crore in FY26: As public sector banks (PSBs) continue to demonstrate resilience and strong asset quality improvement, Financial Services Secretary M Nagaraju has expressed confidence that the combined profit of these banks is expected to cross the landmark Rs 2 lakh crore mark at the end of FY26.

Rupee falls against US Dollar: Indian rupee witnessed a volatile trading session and settled for the day on a lower note against the US dollar, as traders assessed the details of the India-US interim trade framework.

Global front: European markets were trading mostly in red as private report revealed another decline in U.K. permanent job placements in January amid weak market conditions and employer concerns costs. Asian markets settled higher on Monday as technology stocks recovered from last week's rout on AI-linked jitters and Japanese Prime Minister Sanae Takaichi's coalition swept to a historic election win on Sunday, clearing the way for more spending and tax cuts. 

Finally, the BSE Sensex rose 485.35 points or 0.58% to 84,065.75 and the CNX Nifty was up by 173.60 points or 0.68% to 25,867.30.    

The BSE Sensex touched high and low of 84,314.68 and 83,860.42 respectively. There were 22 stocks advancing against 8 stocks declining on the index.        

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.76%, Realty up by 2.64%, Basic Materials up by 2.06%, Industrials up by 1.94% and Telecom up by 1.94%, while Utilities down by 0.03% was the lone losing index on BSE.

The top gainers on the Sensex were SBI up by 7.46%, Titan Company up by 2.78%, Tata Steel up by 2.56%, Ultratech Cement up by 2.52% and Eternal up by 1.91%. On the flip side, Power Grid Corporation down by 1.11%, ITC down by 1.07%, NTPC down by 0.89%, ICICI Bank down by 0.68% and Infosys down by 0.65% were the top losers.

Meanwhile, Moody's Ratings has forecasted that economic growth of India for the next fiscal year 2026-27 (FY27) at 6.4%, which is fastest pace among G-20 economies. The agency has projected growth for the country based on parameters like strong domestic consumption, policy measures, and a stable banking system. In banking system outlook report, it said the bank’s asset quality will remain resilient, with some stress among micro, small and medium enterprises (MSMEs). Regardless, banks have sufficient reserves to absorb loan losses. It noted that the operating environment for banks will remain strong in 2026, supported by robust macroeconomic conditions and structural reforms.

It also said the goods and services tax (GST) rationalization in September 2025 and an earlier increase in personal income tax thresholds will help improve affordability for consumers and support consumption-led growth. Indicating inflation under control and growth momentum remaining strong, it estimated that the Central Bank will further ease monetary policy in fiscal 2026-27 only if there are signs of a slowdown in economic activity. It expects system-wide loan growth to accelerate slightly to 11-13 per cent in fiscal 2026–27, from 10.6 per cent in fiscal 2025-26 YTD.

It said ‘Corporate loan quality will remain healthy, supported by strong balance sheets and improved profitability among large companies. Recoveries will taper as banks have resolved stressed loans to large corporate’. It also said that banks will maintain strong capitalization, supported by internal capital generation that keeps pace with asset growth. Banks' funding and liquidity will be stable, with loans growing in line with deposits. Moody's mentioned that it expects that the government to provide strong support for banks in times of need.

CNX Nifty touched high and low of 25,922.25 and 25,780.90 respectively. There were 34 stocks advancing against 16 stocks declining on the index.  

The top gainers on Nifty were SBI up by 7.63%, Shriram Finance up by 6.03%, Grasim Industries up by 3.11%, Titan Company up by 3.04% and Dr. Reddy's Lab up by 2.80%. On the flip side, Max Healthcare down by 2.82%, NTPC down by 1.05%, ITC down by 0.95%, ONGC down by 0.84% and ICICI Bank down by 0.78% were the top losers.  

European markets were trading mostly in red; UK’s FTSE 100 decreased 13.31 points or 0.13% to 10,356.44 and France’s CAC fell 6.24 points or 0.08% to 8,267.60, while Germany’s DAX gained 92.24 points or 0.37% to 24,813.70. 

Asian markets settled higher on Monday tracking Wall Street’s gains on last Friday as technology shares recovered following several days of heavy selling on concerns about AI spending and disruption. Meanwhile, investors were awaiting for release of key US economic data including reports on jobs, inflation and consumer spending due this week. Japanese shares soared after Japan's ruling Liberal Democratic Party (LDP), led by Prime Minister Sanae Takaichi, secured a historic landslide victory. Chinese shares rose ahead of January inflation and producer price data due later in the week. China’s Montage Technology surged more than 50% in its Hong Kong trading debut after the world’s biggest memory interconnect chip supplier raised HK$7.04 billion in a share sale to mainly fund research. Seoul shares rose amid renewed confidence over the artificial intelligence industry.