Benchmark indices rebounded sharply on March 5, snapping a 10-day losing streak, as value buying at lower levels and a rally in Asian markets lifted investor sentiment.
Sensex surged 943.87 points or 1.29 percent to 73,933.80 in trade today, while the Nifty gained 312.25 points or 1.41 percent to 22,394.90. Tata Steel, Mahindra & Mahindra, HCL Technologies, Tech Mahindra, Adani Ports, Tata Motors, Power Grid, NTPC, Infosys, Tata Consultancy Services, and Bharti Airtel were among the top gainers.
Market participants attributed the uptrend to multiple factors, including optimism over potential tariff relief from the US, strength in Asian markets and bargain hunting in beaten-down stocks.
Key factors driving the rally:
1) US signals tariff relief: A key driver of the market surge was the indication from US Commerce Secretary Howard Lutnick that the Trump administration may ease some tariffs that triggered a global selloff. Lutnick hinted that the US could announce a pathway for reducing tariffs on Mexican and Canadian goods under the North American free trade agreement as early as Wednesday. He suggested that tariffs would likely be adjusted in a measured manner, keeping trade negotiations flexible.
2) Asian market strength: Positive cues from Asian markets also supported the domestic rally. Hong Kong’s Hang Seng Index climbed nearly 2 percent as China pledged fresh stimulus measures amid ongoing trade tensions with the US. Japan’s Nikkei also traded higher, further boosting investor confidence.
3) Heavy buying in broader markets: The Nifty Midcap 100 and Smallcap 100 indices rose nearly 2 percent, recovering from recent declines. Analysts noted that many stocks in the broader market had reached attractive valuations following the sharp correction. "The recent sell-off breached multiple support levels, but oversold conditions in the market presented buying opportunities, setting the stage for a potential short-term rebound," Rajesh Bhosale, analyst at Angel One told Reuters. However, he cautioned that uncertainty over global trade policies could keep investors on edge in the near term.
4) Value buying in blue-chip stocks: Large-cap stocks, including Tata Steel, Adani Ports, and TCS, saw strong buying interest, gaining up to 4 percent. Market analysts pointed out that several high-quality stocks had become relatively cheap after the recent correction, prompting investors to accumulate shares at lower levels.
"Despite a global sell-off following Trump's tariff announcement on Canada, Mexico, and China, Indian markets managed to contain losses better than their Asian peers. Small-cap stocks, which had witnessed severe selling pressure in the past sessions, saw a sharp recovery, while mid-caps posted moderate gains,” said Vishal Vakil, a market strategist.
5) US tariffs on China, Mexico, Canada to help Indian exporters: Imposition of high tariffs on China, Mexico, and Canada by the US is expected to help Indian exporters in increasing their shipments to the American market, experts say. India was the fourth-largest gainer when the US imposed higher duties on Chinese goods during US President Donald Trump's first tenure. "This can help Indian exporters in sectors such as agriculture, engineering, machine tools, garments, textiles, chemicals, and leather," President-designate of Federation of Indian Export Organisations (FIEO) S C Ralhan told PTI.
The market recovered from the lower levels, however, this recovery was not encouraging, believe the market analysts which could have soured the sentiment if there was no support from the global markets.
Shrikant Chouhan, Head Equity Research, Kotak Securities, noted if we consider the broad structure of the market then the indices are trading near the key support zones 22000/72800 and 21800/72300. If the market recovers sharply after touching the lows of 21800/72300, then we may see a strong reversal of the recent sell-off seen from the highs of 23800/82300.
"A close below 21800/72300 will be negative for the market as in that case the chances of touching 21500/71500 would become bright. The strategy should be to buy selective stocks at current levels and buy more on dips with a medium-term outlook. Resistance will be at 22200/73400 and 22500/74300," he added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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