Nifty Prediction For January 12: Trade Tensions, Geopolitical Risks Weigh; Key Support Seen At 25,600

Nifty Prediction For Monday, January 12: Indian equity markets are expected to remain cautious at the start of the new week as rising global trade tensions amid fresh US tariff threats, geopolitical risks and sustained foreign fund outflows continue to weigh on sentiment. Benchmark indices suffered one of their sharpest weekly declines in recent months, with technical indicators now pointing to a fragile near-term structure for the Nifty.

Markets ended the week firmly in the red, with the Sensex falling 2.55% to 83,576.24 and the Nifty slipping 2.45% to 25,683.30. Broader markets underperformed, reflecting a pronounced risk-off environment.

Ajit Mishra, senior vice-president (research) of Religare Broking, said global developments were the dominant

drivers of sentiment. Fresh concerns over sharply higher US tariffs on Indian exports, lingering uncertainty around India-US trade relations and geopolitical tensions involving the US and Venezuela triggered widespread risk aversion. Persistent selling by foreign institutional investors (FIIs), who remained net sellers throughout the week, added to the pressure.

While domestic macro indicators were largely supportive, they failed to offset global headwinds. India’s GDP growth projection of 7.4% for FY26, resilient services and manufacturing activity, improving bank credit growth and strong retail vehicle sales underscored underlying economic strength, but markets remained focused on external risks. Cyclical and policy-sensitive sectors such as energy, metals, realty and banking bore the brunt of the sell-off, while IT and pharma saw relatively limited downside, he added.

Echoing similar concerns, Ponmudi R, chief executive officer of Enrich Money, said Indian equities are grappling with heightened risk aversion triggered by renewed US tariff threats and rising geopolitical tensions. The proposed US measures, particularly those linked to countries buying Russian oil, remain a key near-term overhang. He noted that since late 2025, markets have seen intermittent corrections of 5-8%, with export-oriented sectors like IT and pharma facing the most pressure.

However, Ponmudi pointed out that FII outflows have remained “moderate rather than disorderly”, suggesting controlled risk reduction instead of panic selling. Estimates suggest the potential tariff impact on India’s FY26 GDP could be between 0.5% and 0.7%, though strong domestic consumption, resilient services exports and trade diversification toward the EU, ASEAN and the Middle East may provide a partial cushion.

Nifty technical outlook

On the technical front, the Nifty has broken below the 26,000 consolidation zone and disrupted its short-term uptrend. Mishra said the index is now retesting a crucial medium-term support near the 100-day EMA around 25,600. A decisive break below this level could extend the decline toward 25,300 and even the long-term support near 25,150, close to the 200-day EMA.

While momentum indicators suggest oversold conditions that could trigger a short-term bounce, any recovery is likely to face strong resistance. Immediate hurdles are placed near 26,000, followed by 26,200. “Reclaiming the 20-day EMA around 26,000 will be challenging,” Mishra cautioned.

Ponmudi added that the 25,600–25,700 zone remains a critical demand area, as it represents a prior swing high. A breakdown below 25,600 could open the door to 25,300–25,000. On the upside, resistance lies at 25,800–25,900, with the 26,000–26,100 zone crucial for restoring stability. Options data also reflects a defensive bias, with heavy call writing at 26,000 reinforcing it as a strong resistance.

Offering a similar view, Ravi Singh, chief research officer from Master Capital Services, said the Nifty has slipped below key short-term moving averages and breached its rising trendline, indicating loss of momentum. Immediate support is seen at 25,500, and a break below could drag the index toward 25,300. On the upside, resistance is placed near 25,900, with sustained strength above 26,100 needed for a meaningful recovery. “Sell on rise remains the preferred strategy,” he said.

What to watch

The coming week will see the start of the earnings season (TCS and HCL Tech Q3 FY26 results will be announced on Monday), with IT majors and heavyweight companies set to drive index-level direction. Investors will also track key macro data, including India’s CPI and WPI inflation, trade numbers and foreign exchange reserves, along with global cues such as US inflation data and developments around US tariff policy.

Until there is greater clarity on earnings, global trade negotiations and FII flows, analysts expect volatility to remain elevated, with the Nifty likely to trade with a cautious to mildly bearish bias in the near term.

The US Supreme Court is also expected to issue its next rulings on January 14 as several major cases remain pending including the legality of President Donald Trump’s sweeping global tariffs.

The challenge to Trump’s tariffs marks a major test of presidential powers as well as of the court’s willingness to check some of the Republican president’s far-reaching assertions of authority since he returned to office in January 2025. The outcome will also impact the global economy.