Indian Stock Market Preview: January 27, 2026

Introduction

The Indian equity markets are set to reopen on Tuesday, January 27, 2026, following a scheduled break for the Republic Day holiday. Investors return to a complex market landscape characterized by a significant tug-of-war between aggressive Foreign Institutional Investor (FII) selling and resilient Domestic Institutional Investor (DII) buying. With the Nifty 50 currently hovering near critical psychological support levels and the Union Budget 2026 less than a week away, the upcoming session is expected to be a pivotal moment for short-term market direction.

Retail investors must navigate a cautious environment where global cues remain mixed and domestic sentiment is tempered by pre-Budget nervousness. While the broader indices have slipped into oversold territory, providing potential for a technical bounce, persistent outflows from foreign desks continue to pose a structural headwind. This article provides a comprehensive deep dive into technical levels, sectoral outlooks, corporate actions, and strategic blueprints for the trading session ahead.

Global Market Overview: Mixed Signals and Risk-Off Sentiment

Indian markets will be reacting to the performance of global peers observed during the holiday break. The international backdrop presents a fragmented picture, with technology showing resilience while traditional sectors face geopolitical and trade-related pressures.

US Markets: A Divergent Performance

On January 23, 2026, the US indices closed with mixed results, reflecting a lack of unified conviction among global participants:

• Dow Jones Industrial Average: 49,098.71 (-0.58%)
• S&P 500: 6,915.61 (+0.03%)
• Nasdaq Composite: 23,501.24 (+0.28%)

The technology-heavy Nasdaq demonstrated notable strength, suggesting that investor appetite for growth and tech remains intact despite macroeconomic uncertainty. Conversely, the Dow Jones was weighed down by escalating geopolitical tensions involving Iran and a renewal of trade friction between the US and Europe.

Asian Markets: Broad-Based Weakness

Regional markets in Asia have largely trended lower, which may dampen the opening sentiment for domestic bourses:

• Nikkei 225 (Japan): 52,921.00 (-1.72%)
• Hang Seng (Hong Kong): 26,655.00 (-0.35%)
• Shanghai Composite (China): 4,127.09 (-0.22%)
• KOSPI (South Korea): 4,963.80 (-0.53%)

The sharp decline in Japan's Nikkei indicates a prevalent risk-off sentiment in the region, often a precursor to cautious openings in emerging markets like India.

GIFT Nifty Indicator

The GIFT Nifty is currently trading at 25,111.50, up by 21.50 points (+0.09%). This marginal gain suggests a flat to slightly positive opening for the Indian markets. However, the slim margin of just 21.5 points indicates that offshore traders lack the conviction to drive a significant gap-up.

Domestic Market Snapshot

Previous Session Recap (January 23, 2026)

The last trading session before the holiday was dominated by bears, with heavy selling across major indices:

• Nifty 50: 25,048.65 (-241.25 points, -0.95%)
• Bank Nifty: 58,473.10 (-727.00 points, -1.23%)
• Sensex: 81,537.70 (-769.67 points, -0.94%)

The Bank Nifty underperformed the broader market significantly, shedding over 1.2%. This was primarily driven by disappointing earnings commentary from major private lenders like ICICI Bank, leading to heightened concerns regarding asset quality and compressed Net Interest Margins (NIMs).

Institutional Activity: The DII vs FII Battle

The data reveals a near-perfect offset, where domestic institutions are absorbing almost every rupee sold by foreign investors. However, the cumulative pressure is mounting; FIIs have pulled out a staggering ₹22,420 crores in January 2026 so far, with the FMCG sector bearing the brunt of these outflows.

Technical Analysis: Key Support and Resistance Levels

Nifty 50 Outlook

The Nifty 50 has seen five consecutive days of decline, pushing the Relative Strength Index (RSI) toward oversold territory. This technical setup often precedes a relief rally, provided key psychological floors are defended.

Nifty 50 Levels to Watch:

Bank Nifty Outlook

While facing sectoral headwinds, Bank Nifty has shown pockets of relative strength compared to late 2025. Support from the RBI’s recent liquidity measures—including a 25 basis point rate cut in December 2025—is expected to provide a cushion.

Bank Nifty Levels to Watch:

Sector Analysis and Market Sentiment

1. Banking & Financial Services

Outlook: Cautiously Optimistic
While private sector banks are grappling with margin pressures, PSU banks have displayed better resilience. The recent infusion of liquidity by the RBI is a structural positive. Investors should closely monitor the Q3 commentary for signs of asset quality stabilization.

2. Information Technology (IT)

Outlook: Relatively Positive
The resilience of the Nasdaq and defensive buying in domestic markets have made IT a safe-haven play. Dividend-paying giants like Wipro (₹6/share) continue to attract yield-focused investors. Currency tailwinds from a stable USD are also supportive of earnings.

3. FMCG & Consumer Goods

Outlook: Cautious
This sector has been the primary target of FII outflows this month. Volume growth remains a concern, and the market will look to Marico's earnings for a status report on rural demand recovery.

4. Metals & Infrastructure

Outlook: Pre-Budget Optimism
Expectations of high capital expenditure in Budget 2026 are driving interest. Companies like SAIL and L&T Finance are positioned as prime beneficiaries of the government's infrastructure push.

Earnings Watch: January 27, 2026

Several key corporate results are scheduled for the post-market hours today, which will likely influence Wednesday's opening.

1. Marico Limited: Results and Investor Call at 6:00 PM IST. Focus on volume growth, rural demand, and raw material cost margins.
2. Raymond Lifestyle Limited: Results and Investor Call at 6:00 PM IST. Market will assess post-demerger performance and retail expansion strategy.
3. Share India Securities: Board meeting to consider Q3 results and a third interim dividend. Expected impact is localized to the small-cap segment.

Corporate Actions: Dividends and Rights Issues

Traders should note that several stocks will trade Ex-Dividend on January 27, leading to automatic price adjustments:

Additionally, Dr Lalchandani Labs has announced a rights issue (1:1 ratio at ₹10 per share), which may cause short-term dilution and volatility in the stock.

Union Budget 2026 Expectations (February 1)

The upcoming Budget is the single largest catalyst for the current market. Data suggests the following projections:

• Fiscal Deficit: Projected to be targeted at 4.2% of GDP for FY27.
• Capital Expenditure (Capex): Expected 12-15% increase, with an estimated allocation of ₹12.5-13.1 lakh crores.
• Borrowing: Gross borrowing is likely to rise to ₹16.27 lakh crores.
• Key Themes: Atmanirbhar Bharat (Defense), Railway modernization, and PLI scheme extensions.

Stocks to Watch Today

1. L&T Finance Holdings: Strategy is Buy on Dips. The stock is in an oversold zone with technical targets near ₹300.
2. Canara Bank: Resilience in the PSU space makes it a preferred pick. Support seen at ₹145-150 with a target of ₹160.
3. Steel Authority of India (SAIL): Positioned for a Budget rally. Watch for consolidation breakout with a target of ₹160.
4. Wipro: Trading ex-dividend today; defensive tech strength may limit downside post-adjustment.

Comprehensive Trading Strategy

For Intraday Traders

Adopt a range-bound approach. Expect a flat start and avoid trades in the first 30 minutes. Look to buy Nifty near the 25,000-25,050 support zone with a tight stop-loss. Focus on IT and PSU Banks for momentum.

For Swing Traders (3-7 Days)

Accumulate Budget-sensitive stocks (Infrastructure, Metals) on 2-3% dips. Aim for a 5-8% upside leading into the February 1st presentation. Keep 25-30% cash to manage potential Budget-day volatility.

For Positional Investors

Focus on quality accumulation. Large-caps like HDFC Bank, ICICI Bank, and TCS are reaching attractive valuation zones. Deploy capital systematically over the next 3-4 weeks rather than in a single lump sum.

Key Takeaways

• Nifty 50 psychological support sits at 25,000, while major resistance is at 25,400.
• FII Outflows of ₹22,420 crores in January remain the biggest threat to market stability.
• DII Support of over ₹4,100 crores daily is providing a floor to the current correction.
• Budget 2026 is expected to hike Capex to over ₹12.5 lakh crores, favoring Infra and Defense.
• Marico results at 6:00 PM will be the trendsetter for the FMCG sector.

What This Means for Investors

The current market phase is a typical pre-Budget consolidation. Historical trends indicate that markets often trade with a negative bias or sideways movement just before major fiscal announcements as players square off positions. The extreme selling by FIIs, particularly in the FMCG sector, suggests a rotation of capital rather than a total exit from India.

Investors may consider monitoring the Put-Call Ratio (PCR), which currently stands at 1.71, indicating a slightly bullish tilt in positioning that awaits a trigger. Retail participants should avoid over-leveraging and prioritize capital preservation until the Budget provides a clearer policy roadmap for FY27.