Indian equity markets surged sharply on Thursday, January 22, driven by positive global cues and improving investor sentiment. The benchmark Sensex rallied over 850 points, or more than 1%, to hit an intraday high of 82,783, while the Nifty 50 climbed past 25,435, reclaiming the crucial 25,000 mark. Broader markets outperformed, with the BSE Midcap and Smallcap indices gaining nearly 2% each.

The strong rally added significant wealth for investors, with the total market capitalisation of BSE-listed companies rising by nearly ₹7 lakh crore, reaching approximately ₹461 lakh crore, up from ₹454 lakh crore in the previous session.

Why Is the Indian Stock Market Rising?

Market experts point to a combination of global relief, trade optimism, technical support and steady corporate earnings as the key drivers behind Thursday’s rally.

1. US-EU Trade War Fears Ease

Global markets received a boost after US President Donald Trump softened his stance on Greenland, backing away from threats of imposing tariffs on European countries. Trump indicated progress toward a framework agreement with NATO, easing fears of a potential US-EU trade war.

“Trump’s message that the US would refrain from imposing tariffs on Europe removes a major overhang that had been dragging global markets,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.

2. Hope of an India-US Trade Deal

Investor sentiment was further lifted by renewed optimism around a potential India-US trade agreement. Trump publicly praised Prime Minister Narendra Modi, calling him a “fantastic man” and expressing confidence that both countries would reach a favourable deal. The remarks strengthened expectations of improved bilateral trade relations, adding to market optimism.

3. Short Covering After Recent Sell-Off

The rally also reflected short covering after heavy losses earlier in the week. From Monday to Wednesday, the Sensex had fallen over 1,660 points, while the Nifty declined nearly 2%. “With global uncertainties easing, traders are rushing to cover short positions. The market structure is conducive for a relief rally,” Vijayakumar noted, adding that nearly two lakh short contracts were active in the market.

4. Earnings Largely In Line

Corporate earnings for the December quarter have largely met expectations, helping stabilise sentiment. While some companies faced one-time costs due to new labour code provisions, overall results have been healthy. “We expect 8–10% earnings growth for sectors like auto, NBFCs and metals should deliver strong double-digit growth, offsetting modest performance in banks, IT and consumption,” said Varun Goel, Senior Fund Manager at Mirae Asset Investment Managers (India).

5. Strong Technical Support

From a technical perspective, analysts highlighted 25,000 on the Nifty as a key support level, coinciding with the 200-Day Moving Average (200-DMA). “This level acts as a make-or-break zone. If the Nifty holds above it, we could see further recovery as markets position for positive Budget expectations,” said Santosh Meena, Head of Research at Swastika Investmart. He cautioned, however, that a decisive break below this level could trigger deeper corrections.

Conclusion

The strong rally in Indian equity markets reflects a combination of easing global trade concerns, renewed optimism around India–US relations, steady corporate earnings and supportive technical indicators. While short covering amplified the upward momentum, the broader market strength suggests improving investor confidence in India’s medium- to long-term economic outlook. However, with key technical levels still in focus and global developments evolving, investors are advised to remain cautious and selective while taking advantage of opportunities created by the market’s recovery.