Indian markets set for flat start; investors watch Budget and manufacturing momentum

Indian equity markets will open on a flat to negative note on Thursday after a strong rally amid mixed global cues. Despite positive macroeconomic numbers, analysts said the focus will be on the upcoming Budget, scheduled for Sunday. The Index of Industrial Production (IIP) registered a record-high growth of 7.8% (Quick Estimate) in December 2025, up from 3.7% in December 2024, driven by strong growth in the manufacturing and mining sectors. Manufacturing Surge Rajeev Juneja, President, PHD Chamber of Commerce and Industry (PHDCCI), said the manufacturing sector grew robustly on a year-on-year basis by 8.1% in December 2025. This acceleration is attributed to the fact that 16 out of 23 industry groups at the NIC 2-digit level have recorded positive growth in December 2025 over December 2024 in the manufacturing sector, he said. Value-Added Boost Dr Ranjeet Mehta, Secretary General and CEO, said: “Strong performance across value-added segments such as automobiles, pharmaceuticals, electronics, basic metals, and transport equipment reflects enhanced competitiveness and scale in Indian manufacturing.” “This momentum is expected to translate into higher exports of value-added goods, strengthening India’s integration into global value chains. Thus, a sustained progress in the manufacturing front will reinforce India’s position as a resilient and globally competitive manufacturing hub over the medium term,” he said. Industrial Momentum Similarly, Rajeev Sharan, Head of Criteria, Model Development, and Research - Brickwork Ratings, noted that India’s industrial output surged 7.8% in December 2025, marking its fastest pace in over two years and underscoring broad-based momentum across manufacturing, mining, and electricity. “The rebound in consumer durables and infrastructure goods signals strengthening domestic demand, while capital goods growth reflects investment revival. This improving industrial momentum is well timed with the just concluded India–EU FTA, which will progressively lower tariffs and open a 450 million consumer market for Indian manufacturers, especially in engineering, textiles, and autos. Together, stronger domestic production and better EU market access can reinforce India’s medium-term growth and are clearly credit positive,” he added. Gift Nifty is ruling at 25,370, about 75 points lower than Nifty futures’ closing yesterday. India–EU FTA The India–EU Free Trade Agreement (FTA) is likely to support the positive momentum witnessed over the past two trading sessions, said Ponmudi R, CEO of Enrich Money. “With tariffs eliminated on 90–96% of traded goods, the FTA is structurally positive for India’s export-led sectors such as textiles, apparel, leather, gems & jewellery, marine products, tea, coffee, chemicals, and MSMEs, while also aiding technology inflows, services mobility, and long-term competitiveness,” he said and adding near-term market upside may remain capped due to persistent FII outflows, pre-Budget positioning, and mixed global cues including the heightened geo-political tension in the Middle East. F&O Caution F&O trading on the NSE indicates a cautious outlook. Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities, said: Call writers have aggressively added fresh positions at at-the-money and nearby strikes, effectively capping near-term upside. Conversely, some writers have begun adding positions at lower strike prices, suggesting expectations of a range-bound market with defined floors. The Put–Call Ratio (PCR) edged marginally lower to 0.82 from 0.83, signalling continued caution and the dominance of call writing. Meanwhile, equities across the Asia-Pacific region are down marginally in early-morning trading on Thursday. Published on January 29, 2026