As European leaders prepare to arrive in India for the 16th EU–India Summit on January 27, negotiators from both sides are intensively working to resolve the remaining details of a comprehensive trade agreement. This summit represents a critical opportunity to advance a Free Trade Agreement that has been under discussion for more than two decades, facing persistent challenges related to agricultural sensitivities, carbon border levies, services, and non-tariff barriers.
Market Anticipation and Recent Performance
Market participants and investors are poised to closely monitor developments surrounding the India–EU trade deal in the coming week. The potential agreement is anticipated to play a pivotal role in shaping the direction of the Indian stock market, with significant implications for various sectors.
On Friday, Indian benchmark indices experienced notable selling pressure, reflecting broader market volatility. The Nifty 50 declined more than 2.5 percent to settle at 25,048, while the BSE Sensex fell nearly 2.4 percent to close at 81,537. This downturn underscores the market's sensitivity to geopolitical and economic developments.
Key Details of the Proposed Trade Deal
The India–European Union free trade agreement, slated for potential announcement during the summit, is expected to reduce costs and enhance bilateral trade without undermining domestic industries. According to insights from the Global Trade Research Initiative, as reported by the Times of India, the pact aims to foster economic cooperation through mutual benefits.
India–EU merchandise trade surpassed $136 billion in FY2025, highlighting the substantial economic relationship between the two regions. GTRI analysis indicates that tariff reductions under the agreement would primarily lower input costs, strengthen value-chain integration, and increase trade volumes. These are typical advantages of FTAs that support producers and consumers on both sides.
Complementary Economic Structures
Ajay Srivastava, founder of GTRI, emphasized that India and the EU are not rivals but partners operating at different levels of the value chain. India focuses on labour-intensive and downstream production, while the EU supplies capital goods, advanced technology, and industrial inputs. This structural complementarity suggests that an India-EU FTA is likely to lower costs and expand trade rather than threaten domestic industry.
Indian exports to the EU, including smartphones, apparel, footwear, tyres, pharmaceuticals, auto components, refined fuels, and cut diamonds, largely replace the EU's imports from other countries rather than competing directly with European manufacturing, much of which has been offshored. Conversely, the EU supplies India with high-end machinery, aircraft, key electronic components, chemicals, advanced medical devices, and metal scrap.
Impact on Indian Stock Market
Sandeep Pandey, Co-founder of Basav Capital, anticipates that the Indian stock market may see a gap-up opening on Tuesday, January 27, driven by optimism surrounding the India-EU trade deal. This sentiment is expected to fuel business volumes for export-oriented companies.
Pandey further explained that the trade deal could increase US dollar inflows, leading to appreciation in the Indian Rupee. The Rupee hit an all-time low of 92 per dollar on Friday but recovered marginally to settle at 91.88. An appreciation in the rupee is projected to benefit export-oriented companies, potentially resulting in better earnings in upcoming quarters and boosting demand in the consumer durable segment.
Gold and Silver Prices Outlook
Meanwhile, gold and silver prices are likely to maintain their bullish trend in the coming week, according to market experts. Anuj Gupta, Director of Ya Wealth Research & Advisory, believes that both precious metals may experience a mild correction in the near term, but the broader outlook remains positive over the long run.
Gupta noted that gold is expected to continue serving as a key safe-haven asset amid ongoing global uncertainties, while silver demand is likely to stay resilient, supported by its dual appeal as both a precious and industrial metal.
Technical Analysis for Precious Metals
On the technical front, Gupta highlighted that gold is trading with key support seen at ₹1,52,000 ($4,930), followed by a stronger base at ₹1,48,000 ($4,870). Immediate resistance is placed at ₹1,60,000 ($5,020), with a higher hurdle at ₹1,65,000 ($5,080).
For silver, support is observed at ₹3,25,000 ($98), with the next downside level at ₹3,15,000 ($93). Resistance for silver is seen at ₹3,40,000 ($105), and a decisive move above this level could open the door toward ₹3,50,000 ($110).
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to consult with certified experts before making any investment decisions.
