Stock Market Today: Sensex at 85,120; Nifty Near 25,850

The market mood turns optimistic and risk appetite returns after weeks of cautious trading

The Indian stock market shows a strong rally at press time, after the announcement of a major trade agreement between India and the United States. Investor confidence improves sharply as the deal is seen as positive for exports, business growth, and long-term economic stability. 

Buying interest appeared across several sectors, creating one of the strongest single-day movements in recent months. The market mood turns optimistic and risk appetite returns after weeks of cautious trading.

The benchmark indices experience a sharp increase during the initial trading period. The Nifty crosses the 25,800 level, while the Sensex jumps by more than 2,300 points during morning trade. The surge demonstrates active involvement from both domestic and international investors. 

The market experiences broad strength because multiple stocks demonstrate price increases throughout the trading day. Market experts say such wide participation usually signals confidence in the future earnings outlook.

Sector-Wise Performance and Market Breadth

All major sectors are trading in the green zone as the rally gains momentum. Banking, information technology, consumer goods, and energy stocks lead the gains.  Domestic cyclic sectors such as infrastructure and consumer discretionary products experience heavy buying because traders believe the trade agreement will boost domestic economic growth.

The market maintains a strong positive trend because most stocks listed on the exchange show higher prices compared to their previous trading day. Analysts say this kind of movement usually happens when there is a strong policy-driven trigger rather than short-term speculation.

Analysts state that this movement usually happens when there is a strong policy-driven trigger rather than short-term speculation.

Currency and Bond Market Reaction

The positive sentiment is also visible in the currency and bond markets. The Indian rupee strengthened by approximately 1% against the US dollar. This appreciation helps companies with foreign currency exposure to improve their balance sheets while decreasing their import expenses. The stronger rupee indicates that foreign investors have increased their confidence in India's economic stability.

The bond market shows a decline in the 10-year government bond yield, which dropped approximately five basis points. The market experiences lower yields, showing that investors require less risk premium as they expect better inflation and growth results. 

The lower borrowing costs will help both the government and companies to manage their expenses. The bond market movement provides extra support to equity markets as investors transfer their funds from fixed-income investments to stocks.

Trading Activity and Derivatives Market

High trading volumes continued throughout the entire session, demonstrating strong market participation. Several indices experienced high volatility, which gradually decreased throughout the course of the day. 

In the derivatives market, option implied volatility drops after the initial surge, suggesting that fear in the market is reducing. Traders have become more bullish about the market as the put-call ratio has decreased.

The brokerage reports demonstrate that domestic institutional investors, including mutual funds and insurance companies, have made substantial purchases. Foreign investors start returning to the market after staying away for several weeks. The combination of domestic support and foreign interest enables markets to maintain their upward trend for multiple trading sessions.

Economic and Political Impact

The trade agreement brings two major impacts for the economy. The manufacturing and services sectors are expected to experience export growth in the upcoming quarters. The planned tariff reductions will result in higher corporate earnings expectations, according to the current implementation schedule. 

The agreement establishes a powerful political and strategic indication that decreases the uncertainty that arises from international trade conflicts and energy security issues. 

Outlook and Risk Factors 

The current risk situation exists despite the strong market rally that occurred recently. Traders who seek immediate profits typically sell their assets after experiencing substantial price increases. The Reserve Bank of India policy meeting and corporate earnings announcements will create new market volatility through their upcoming events. 

Market participants closely watch foreign investor flows, inflation data, and global cues to judge whether the rally can continue. 

February 3, 2026, stands out as a decisive day for the Indian stock market. The equity indices rise alongside the rupee, which gains strength, and bond yields decline, indicating that economic and external risks need to be re-evaluated. The upcoming weeks will determine whether the current optimism will remain or disappear due to upcoming difficulties.