Stock Market Outlook Today, 4 February 2026: Sensex, Nifty to Stay Volatile After India-US Trade Deal Rally

Indian equity markets are set to enter Wednesday's session on a cautiously optimistic note after a sharp relief rally on February 3, driven by the long-awaited India-US trade agreement that removed a major macro overhang and lifted overall market sentiment.

Stock Market Outlook Today, 4 February 2026: Nifty, Sensex Prediction for Wednesday Trading

On Tuesday, domestic benchmarks logged one of their strongest single-day gains in recent months. The BSE Sensex surged 2.54% to close at 83,739.13, while the NSE Nifty 50 advanced 2.55% to end at 25,727.55. The rally was broad-based, with midcap and small-cap indices outperforming, both rising close to 3%, reflecting strong participation across the market.

The trigger for the rally was the announcement of the India-US trade deal, under which the US will cut reciprocal tariffs on Indian goods to 18%, while India will lower trade barriers and step up imports from the US.

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Prime Minister Narendra Modi described the agreement as a boost for "Made in India" exports and long-term strategic ties. Stocks linked to infrastructure and energy also attracted buying interest, with Adani Group shares gaining on expectations of improved energy trade and project opportunities arising from deeper bilateral cooperation.

Sectorally, most indices ended in the green. Realty led the gains with a rise of nearly 4.8%, followed by infrastructure, energy, pharmaceuticals and banking stocks. FMCG stocks posted modest gains, while IT underperformed relative to the broader market.

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"Indian Equities witnessed one of the biggest single-day gains on Tuesday after India and US announced a long-awaited trade deal, easing tariff-related concerns that have weighed on Indian markets since Apr'25," Siddhartha Khemka, Head of Research - Wealth Management at Motilal Oswal Financial Services. He noted that the Nifty opened more than 1,200 points higher and closed with gains of 639 points at 25,728, while broader indices jumped nearly 3% each.

Khemka highlighted that the US decision to reduce reciprocal tariffs on Indian imports from 25% to 18% and withdraw the additional 25% punitive levy linked to Indo-Russian oil trade implies a sharp reduction in the overall tariff burden. "This materially improves the competitiveness of Indian exports in the US and is likely to lift market sentiment, with a multi-layered positive impact on the economy and export-facing sectors," he said.

According to him, key beneficiaries include auto ancillaries, defence, textiles, EMS, consumer durables, IT services and utilities, with financials likely to see indirect gains through improved growth visibility. He also expects a reversal of FII outflows and recovery in the rupee, supporting continued positive momentum in the near term.

Nifty Prediction Today, 4 February 2026

From a technical perspective, Bajaj Broking Research pointed out that despite the strong rally, some profit booking was visible at higher levels. In its Nifty outlook, the brokerage said, "The index formed a bear candle (as close was below the open) with a sizable bullish gap (25,108-25,641) below its base signaling profit booking at higher levels after a strong opening on the weekly expiry trade."

Immediate support is seen around the 25,450 level, which coincides with the previous week's high and the 20-day EMA. "Nifty holding above the support area will keep the bias positive and will open upside towards 26,000 and 26,350 levels in the coming sessions," the note added, while cautioning that volatility may remain elevated due to global cues and the upcoming RBI monetary policy announcement.

Bank Nifty Today, 4-2-2026

For the banking space, Bajaj Broking noted a similar pattern. "Bank Nifty formed a bear candle (as close was below the open) with a sizable bullish gap (58,687-59,793) below its base signaling profit booking at higher levels after a strong opening," the brokerage said. Immediate support for Bank Nifty lies in the 59,500-59,200 zone, aligned with the 20- and 50-day EMAs.

As long as the index holds above this range, "the bias will remain positive and will open upside towards 60,800 and 61,700 levels in the coming sessions." Key short-term support is placed in the 58,500-58,000 zone.

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