Indian Equities Poised for Modest Gains Amid Regulatory Support and Global Cues

Indian shares are anticipated to start the new trading session with modest gains, building on the momentum from the final trading day of 2025. The Sensex and Nifty50 closed the previous year with gains of approximately 0.6% and 0.7%, respectively, as investors sought value opportunities following a period of weakness. A key driver for the domestic market is the Union cabinet's decision to freeze Vodafone Idea's adjusted gross revenue (AGR) dues at Rs 87,695 crore. The government has rescheduled these payments over a ten-year period, beginning in the 2031-32 fiscal year, providing significant financial relief to the telecom operator. Sectoral strength is expected in metals following the announcement of a three-year safeguard duty of up to 12% on select steel imports. Additionally, market participants are awaiting monthly vehicle sales figures from major automobile companies and Q3 updates from HUDCO and IREDA to guide intraday trading. Institutional activity remains divergent, with foreign institutional investors (FIIs) acting as net sellers of Rs 3,597.38 crore, while domestic institutional investors (DIIs) provided support with net purchases of Rs 6,759.64 crore. Despite equity growth—with the Nifty50 surging nearly 10% in 2025—the Indian currency depreciated by 5% over the year, its steepest decline in three years. Global sentiment remains cautious as U.S. stocks ended lower for a fourth consecutive session. Minutes from the Federal Reserve's December meeting highlighted deep divisions among policymakers regarding the interest rate trajectory for 2026, weighing on the Dow, Nasdaq, and S&P 500.