Indian equity markets maintained a moderately bullish trend on January 28, 2026, marking a second day of gains as optimism from the India-EU trade deal and upcoming Union Budget fueled buying in defense, energy, and PSU stocks. This positive momentum, despite concerns over elevated bond yields and mixed large-cap performance, was amplified by strong outperformance in the broader midcap and smallcap segments.
Indian equity markets displayed moderately bullish sentiment on January 28, 2026, with the Sensex and Nifty extending gains for the second consecutive session. The rally was primarily fueled by optimism surrounding the landmark India-EU Free Trade Agreement, positive global cues, and anticipation for the upcoming Union Budget on February 1. Sectoral strength in defense, energy, metals, and PSU stocks offset some weakness in FMCG and select large-caps, while broader midcap and smallcap indices outperformed significantly. Investors remained cautious amid elevated bond yields and ongoing earnings scrutiny, but overall sentiment leaned positive ahead of key fiscal announcements.
- Indian benchmarks rallied on India-EU FTA optimism and budget expectations, lifting key indices.
- Defense and energy sectors led sharp gains with BEL and ONGC surging up to 9 percent.
- Broader markets outperformed as midcaps and smallcaps rose 1.7% and 2.3% respectively.
- US Federal Reserve maintained rates at 3.5%-3.75%, providing global stability cues.
- Bond yields climbed to multi-month highs on heavy government borrowing concerns.
Indian Equity Benchmarks Extend Gains on India-EU FTA Optimism and Budget Anticipation
The BSE Sensex closed at 82,344.68, up 487.20 points or 0.60 percent, while the NSE Nifty settled at 25,342.75, gaining 167.35 points or 0.66 percent. Markets extended the previous day's rally following the landmark India-EU Free Trade Agreement signed on January 27. The deal eliminates or reduces tariffs on over 90 percent of Indian goods exported to the EU. This development boosted sentiment toward export-oriented sectors and overall economic growth prospects. Capital expenditure-linked stocks, including those in infrastructure and defense, saw strong buying interest. Investors positioned ahead of the Union Budget presentation scheduled for February 1. The agreement is expected to enhance bilateral trade volumes significantly over the coming years. Broader market participation was evident with advances outnumbering declines. Midcap and smallcap indices outperformed the benchmarks notably. Positive global cues from stable US markets contributed to the upward momentum. However, subpar quarterly earnings in certain segments tempered the extent of gains. The rally reflects renewed confidence in India's external trade positioning. Sectors like energy and metals benefited from sectoral rotation. Overall trading volumes remained healthy throughout the session. Market breadth stayed positive with more stocks advancing. The development underscores India's strategic trade diversification efforts. Investors now await budget measures to sustain the momentum. This FTA could provide long-term support to manufacturing and export growth.
Source: The Hindu BusinessLine, https://www.thehindubusinessline.com/markets/share-market-nifty-sensex-live-updates-28th-january-2026/article70556442.ece
US Federal Reserve Holds Interest Rates Steady at 3.5%-3.75% Range
The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 3.5 to 3.75 percent. The decision came in an 8-2 vote with two governors dissenting in favor of a cut. Economic activity was described as expanding at a solid pace. Unemployment levels remained stable near maximum employment goals. Inflation continued to show somewhat elevated readings above the 2 percent target. The Committee emphasized careful assessment of incoming data for future adjustments. No immediate sense of urgency for rate reductions was conveyed. Chair Powell highlighted the economy operating on a firm footing. The current rate level was not viewed as restrictive. Policymakers will monitor evolving outlook and balance of risks closely. This hold marks a pause after previous easing measures in 2025. Global markets reacted with measured stability to the announcement. Emerging market flows, including to India, could see continued support from this stance. The decision influences capital allocation decisions worldwide. Expectations for the next potential cut shifted toward mid-2026. The Fed remains committed to its dual mandate of employment and price stability. This outcome provides predictability for international investors. Bond markets adjusted modestly in response. Equity indices in the US showed resilience post-decision. The policy stance supports gradual normalization if inflation moderates. Overall, it offers a balanced backdrop for global risk assets.
Source: Federal Reserve, https://www.federalreserve.gov/newsevents/pressreleases/monetary20260128a.htm
Indian Bond Yields Rise to Multi-Month Highs Amid Record Borrowing Concerns
The 10-year government bond yield climbed to around 6.70-6.72 percent, marking an 11-month high. Yields rose sharply due to anticipation of massive government debt issuance in the coming fiscal year. Supply pressures from record borrowing estimates weighed heavily on the fixed income market. Heavy state government borrowings added to the overall supply overhang. Large maturities in the system further exacerbated funding strains. The RBI conducted open market operations to provide some liquidity support. Despite interventions, investor caution persisted ahead of the budget. Elevated short-term rates contributed to higher borrowing costs across the curve. Private sector demand for credit remained somewhat softened. Banks faced challenges with deposit growth lagging advances. This dynamic pressured funding costs for lenders. Bond markets flashed caution signals with yields trending upward. The development could impact corporate borrowing expenses going forward. Fiscal deficit management remains under scrutiny. Investors monitored potential budget announcements on borrowing plans. Temporary relief came from advance bond purchases by the central bank. Overall sentiment in the debt market turned risk-averse. Yields reflected concerns over sustained high issuance volumes. This trend may influence equity valuations indirectly through higher discount rates. The fixed income segment highlighted macro prudence needs.
Source: Reuters, https://www.reuters.com/world/india/india-bonds-flash-red-ahead-30-trillion-rupee-debt-wave-2026-01-28
Defense Stocks Surge Led by BEL Amid Sectoral Strength and Budget Hopes
Bharat Electronics Limited (BEL) rallied sharply, gaining up to 9.21 percent during the session. The defense sector outperformed significantly on renewed investor interest. BEL's strong performance reflected positive sentiment toward indigenization efforts. Geopolitical factors continued to support defense spending expectations. The upcoming budget is anticipated to allocate higher outlays for the sector. Capital goods and infrastructure-linked names joined the rally. PSU defense entities benefited from sectoral rotation flows. Broader market gains provided supportive tailwinds. Technical breakouts were observed in several defense counters. Investor focus shifted toward capex-heavy themes pre-budget. BEL's order book strength underpinned the momentum. Sector indices posted notable outperformance versus benchmarks. Positive global cues aided risk-on flows into the theme. Long-term growth prospects in defense manufacturing remained attractive. The rally highlighted sector resilience amid broader earnings variability. Traders positioned for potential budget surprises favorably. Mid and smallcap defense players also participated actively. Overall, the sector emerged as a key outperformer of the day. This development signals continued investor preference for thematic plays.
Source: Angel One, https://www.angelone.in/news/market-updates/top-gainers-and-losers-on-january-28-2026-bel-ongc-rally-up-to-9-tata-consumer-asian-paints-drag
Energy and Oil & Gas Stocks Rally with ONGC Leading Gains Up to 9%
Oil and Natural Gas Corporation (ONGC) surged around 8-9 percent in a strong sectoral show. The energy index jumped notably amid buying interest. ONGC's recent partnerships for ethane carriers bolstered confidence. Global commodity trends provided supportive undercurrents. Energy security focus remained prominent in investor discussions. Metal and mining stocks also contributed to broader resource sector strength. PSU energy names led the charge with significant volume participation. The rally aligned with positive global cues from stable oil prices. Sector rotation favored cyclicals over defensives. ONGC's strategic moves enhanced supply chain resilience perceptions. Broader energy demand outlook stayed constructive. Traders capitalized on momentum in upstream players. The performance highlighted sector appeal pre-budget. Infrastructure and capex themes overlapped with energy plays. Overall gains reflected optimism in resource sectors. This move helped lift benchmark indices meaningfully. Energy emerged as a key driver of market breadth.
Source: Angel One, https://www.angelone.in/news/market-updates/top-gainers-and-losers-on-january-28-2026-bel-ongc-rally-up-to-9-tata-consumer-asian-paints-drag
Adani Green Advances on India's Largest Battery Energy Storage Project
Adani Green Energy progressed significantly with the nation's largest battery energy storage system initiative. The project aims to enhance renewable integration and grid stability. This development supports India's ambitious green energy transition targets. Battery storage addresses intermittency challenges in solar and wind power. The move aligns with national sustainability objectives. Investor interest in renewables remained resilient despite market volatility. Adani Green's execution track record bolstered sentiment. The project could attract further investments into the sector. Grid reliability improvements are expected to benefit overall energy ecosystem. Corporate announcements like this sustain positive narratives in clean energy. The initiative positions India as a leader in renewable infrastructure. Market implications include potential upside for related stocks. This underscores private sector role in energy transition. Long-term growth prospects in renewables appear intact. The advancement highlights strategic focus on storage solutions.
Source: Swastika Investmart, https://www.swastika.co.in/blog/stocks-in-news-28-january-2026-key-corporate-updates-investors-should-track-key-updates-before-union-budget
TCS Announces Major Investment Expansion in Brazil for Global Growth
Tata Consultancy Services revealed a substantial investment to expand operations in Brazil. The move strengthens TCS's presence in emerging Latin American markets. It targets growing demand for IT services in the region. The expansion enhances TCS's global delivery capabilities significantly. Revenue diversification beyond traditional markets is a key driver. Strategic geographic footprint broadening supports long-term growth. Investor confidence in IT sector resilience persisted. TCS's strong balance sheet enables such international pursuits. The announcement reflects confidence in sustained digital transformation demand. Brazil's market offers opportunities in banking and retail verticals. This development bolsters TCS's competitive positioning worldwide. Market reaction remained supportive toward large-cap IT names. Global client acquisition strategies continue to pay dividends. The investment underscores India's IT leadership narrative.
Source: Swastika Investmart, https://www.swastika.co.in/blog/stocks-in-news-28-january-2026-key-corporate-updates-investors-should-track-key-updates-before-union-budget
ONGC Secures Shipbuilding Contracts for Very Large Ethane Carriers
ONGC entered agreements for constructing two Very Large Ethane Carriers with international partners. The vessels will enhance India's petrochemical logistics capabilities. Collaboration with Samsung Heavy Industries and Mitsui O.S.K. Lines strengthens supply chain resilience. The initiative addresses growing ethane import needs efficiently. Energy security remains a strategic priority for the nation. ONGC's proactive steps mitigate potential disruptions. The contracts support domestic petrochemical industry expansion. Market sentiment toward upstream energy players improved. This development aligns with broader energy independence goals. Logistics enhancements could reduce costs over time. Investor focus on energy infrastructure plays increased. The announcement contributed to sector strength on the day. Strategic partnerships bolster India's global energy positioning.
Source: India Infoline, https://www.indiainfoline.com/news/markets/top-stocks-for-today-28th-january-2026
FMCG Stocks Underperform with Tata Consumer and Asian Paints Dragging Indices
Tata Consumer Products and Asian Paints featured among top losers in the session. The FMCG sector lagged amid subpar quarterly performance. Consumer spending patterns showed variations across categories. Earnings misses in select large-caps pressured sentiment. Rural demand recovery remained gradual in some segments. Urban consumption faced headwinds from elevated inflation. Sector rotation away from defensives favored cyclicals. FMCG underperformance contrasted with resource sector gains. Investors reassessed valuations in the space. Budget expectations for rural stimulus could provide future support. Near-term weakness highlighted earnings sensitivity. The drag limited overall index upside modestly. Sector challenges underscore consumption recovery nuances.
Source: Angel One, https://www.angelone.in/news/market-updates/top-gainers-and-losers-on-january-28-2026-bel-ongc-rally-up-to-9-tata-consumer-asian-paints-drag
Broader Market Outperformance Continues in Midcaps and Smallcaps
Midcap and smallcap indices rose 1.7 percent and 2.3 percent respectively. Broader markets outperformed frontline benchmarks significantly. Thematic buying in capex and PSU themes drove participation. Retail and domestic investor flows supported smaller companies. Market breadth remained favorable with advances dominating. This trend reflects rotation toward value and growth opportunities. Mid and smallcaps benefited from pre-budget positioning. Earnings variability was less pronounced in broader universes. Investor confidence in domestic recovery played out. The outperformance highlights diversified market strength. Liquidity conditions aided broader participation. This dynamic provided resilience to overall sentiment.
Source: The Hindu BusinessLine, https://www.thehindubusinessline.com/markets/share-market-nifty-sensex-live-updates-28th-january-2026/article70556442.ece