Indian stock markets and the rupee experienced a relief rally on Thursday, January 22, 2026, following President Trump's announcement that he would not impose tariffs on European nations concerning Greenland. This decision eased fears of a potential trade war between the U.S. and Europe, boosting investor sentiment and reversing a three-day losing streak.

Market Performance

Both the BSE Sensex and the NSE Nifty indices opened on a positive note and maintained their gains throughout the day. The BSE Sensex closed approximately 0.5% higher at 82,307 points. The NSE Nifty 50 also reflected this positive trend, gaining 0.53% to close at 25,289.90.

Several sectors contributed to the market's upswing, with auto stocks, PSU banks, services and metal sectors leading the gains. Top gainers on the Sensex included Adani Ports (2.72%), Tata Steel (2.68%), and Tata Motors (2.37%). Conversely, Eternal Limited (-1.83%), Titan Company (-1.40%), and Indusind Bank (-0.67%) were among the top losers.

Smaller and mid-sized companies also saw positive movement, with their respective indices rising by about 1.5% and 1.8%.

Rupee Rebound

The Indian rupee, which had previously fallen to a record low of ₹91.65 against the US dollar, also experienced a rebound. The rupee appreciated by 15 paise to open at ₹91.54 against the dollar and continued to strengthen, trading at ₹91.50 against the greenback. This recovery was attributed to the improved risk appetite following Trump's announcement.

Factors Influencing the Market

• Trump's Announcement: President Trump's statement that he would not impose tariffs on European nations due to an agreement on a "framework for a future deal" with NATO regarding Greenland was a primary driver of the market's recovery.
• Optimism on US-India Trade: Trump also expressed optimism about a potential trade deal with India, referring to Prime Minister Modi as a "close friend" and anticipating a "good deal".
• EU-India Security Partnership: The announcement by EU Foreign Policy Chief Kaja Kallas that the EU and India had agreed to advance a new security and defense partnership further contributed to positive sentiment.
• Domestic Equities Support: Encouraging trends in the domestic equity market also bolstered the rupee's rise.

Ongoing Vulnerabilities

Despite the positive momentum, uncertainties in the global economy continue to pose risks to the Indian rupee. Forex traders have indicated that the rupee remains vulnerable to geopolitical tensions and external shocks until a trade agreement with the U.S. materializes and geopolitical risks subside.

Global Context

The market's positive reaction mirrored a broader rally in Asian markets, which tracked gains on Wall Street after Trump's comments. The agreement on Greenland and the backing away from tariffs eased concerns about potential trade wars and geopolitical instability.