Dalal Street witnessed a wave of optimism on Friday, January 16, 2026, as the Indian markets rebounded sharply following a mid-week slump. The rally was fueled by a dual catalyst: positive geopolitical signals from U.S. President Donald Trump regarding peace efforts in the Middle East and a blockbuster earnings report from IT bellwether Infosys.
In early trade, the Sensex jumped more than 400 points, reclaiming the 83,600 level, while the Nifty 50 rose steadily to trade near 25,780. This recovery comes as a relief to investors after the markets remained closed on Thursday for the Maharashtra municipal elections.
Trump’s ‘Board of Peace’ Calms Geopolitical Tensions
The primary driver for the global "risk-on" sentiment was a series of posts by President Trump on his social media platform, Truth Social. Trump announced the establishment of "THE BOARD OF PEACE," a move aimed at accelerating the next phase of the Gaza Peace Plan.
Key highlights from the announcement include:
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The Board of Peace: Chaired by Trump himself, the board aims to oversee a transition to a technocratic Palestinian government in Gaza.
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Iran De-escalation: Trump cited reports that planned executions of Iranian protesters had been halted, signaling a slight softening of tensions that had previously pushed oil prices to 2-month highs.
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Regional Stability: The push for "comprehensive demilitarization" in Gaza has led investors to hope for a stabilized Middle East, reducing the "war premium" on global commodities.
Crude Oil Prices Ease as Supply Fears Recede
The cooling of tensions directly impacted the energy markets. Crude oil prices, which had touched $65 per barrel earlier in the week, eased to approximately $63.60 on Friday morning. For a major oil importer like India, falling crude prices are a significant macro-economic tailwind, helping to curb inflation and improve the trade deficit.
Tech Giants Lead the Charge
Domestically, the rally was spearheaded by the IT sector. Infosys shares surged nearly 5% after the company raised its revenue growth guidance for FY26 to 3-3.5%. This better-than-expected performance from the country's second-largest IT firm triggered a broad-based rally in Tech Mahindra, HCL Tech, and Wipro.
Out of the 30 Sensex stocks, 16 were trading in the green during early hours. Banking and Auto sectors also saw healthy buying, while Pharma and Metal shares faced minor profit-booking.
Institutional Play: DIIs vs. FIIs
Despite the morning surge, the tug-of-war between institutional investors continues. On January 14, Foreign Institutional Investors (FIIs) offloaded shares worth ₹4,781 crore. However, Domestic Institutional Investors (DIIs) remained the market's backbone, purchasing equities worth ₹5,217 crore to offset the foreign outflows.
Conclusion: A Cautiously Optimistic Outlook
The Indian markets are currently navigating a complex landscape of cooling oil prices and shifting global alliances. While the "Trump effect" has provided a temporary boost, the long-term trajectory will depend on the actual implementation of the Gaza peace plan and the sustainability of the IT sector's recovery.
