Dalal Street is set for a positive opening on Tuesday after a long weekend, buoyed by encouraging global trade developments, particularly the India–European Union free trade agreement and expectations of possible tariff relief from the United States.

Early indicators suggest the Nifty 50 could start the session above last week’s closing levels. Gift Nifty futures were trading around 25,187 at 8:30 AM, pointing to an opening above Friday’s close of 25,048.65. Indian equity markets remained shut on Monday due to the Republic Day holiday.

The upbeat opening follows a weak performance last week, when benchmark indices posted their sharpest weekly decline in four months. The Nifty 50 fell 2.5%, while the BSE Sensex slipped 2.4%, weighed down by heavy foreign investor outflows and concerns over global trade tensions.

Investor sentiment has improved after India and the European Union concluded negotiations on a long-awaited trade agreement, which is expected to be formally announced on Tuesday. Market participants believe the deal could support exports and enhance business confidence amid uncertain global trade conditions.

Adding to optimism, comments from U.S. Treasury Secretary Scott Bessent suggesting a possible rollback of an additional 25% tariff on Indian goods have raised hopes of easing trade pressure. The remarks followed a reduction in India’s imports of Russian crude oil. Any relief from U.S. tariffs is seen as positive for Indian exporters.

However, risks remain. Foreign institutional investors continued to sell Indian equities, offloading shares worth Rs 4,113.38 crore on Friday. Total foreign outflows for January have reached Rs 40,704.39 crore, the highest monthly outflow since August 2025.

A weakening rupee against the U.S. dollar and renewed global trade tensions also pose challenges. On Monday, U.S. President Donald Trump announced fresh tariffs on imports from South Korea, adding to global uncertainty. While markets may open higher on trade-related optimism, volatility is likely to persist through the session.