Markets snap 5-day losses: Sensex settles 1,000 pts higher from day’s low on Sergio Gor’s comments on trade deal, Nifty ends near 25,800

Stock Market Today News: Sensex, Nifty see value buying in trade. 

The benchmark equity indices Sensex and Nifty rebounded sharply from the day’s low on Monday and settled higher after facing a massive drubbing in the past five trading sessions as comments by US Ambassador to India Sergio Gor on ongoing trade talks lifted investor sentiment. The market mood was also propelled by bargain hunting in energy, banking and metal shares.

The Sensex climbed 301.93 points, or 0.36 percent to settle at 83,878.17. During the morning trade, it tumbled 715.17 points, or 0.85 percent to 82,861.07, breaching the 83,000 level.

The Nifty edged higher by 106.95 points, or 0.42 percent to 25,790.25. The benchmark tanked 209.9 points, or 0.81 percent to 25,473.40 in morning trade.

The markets staged a swift recovery after Gor said both countries were actively engaged on the trade front. "Both sides continue to engage actively, and the next call on trade will take place tomorrow," he said.

A positive undertone also emerged after Gor said President Donald Trump is expected to visit India in the next one to two years.

Key reasons behind sharp market recovery

1) India-US Trade deal hopes: No country is as essential than India for Washington and both sides are actively engaged in firming up a trade deal, US ambassador Sergio Gor said on Monday. Real friends can disagree, but always resolve their differences in the end, he said in his arrival speech while referring to the friendship between Prime Minister Narendra Modi and President Donald Trump.

"India is the world's largest nation. So it's not an easy task to get this across the finish line, but we are determined to get there," he said at a ceremony attended by US embassy employees here.

"And while trade is very important for our relationship, we will continue to work closely together on other very important areas such as security, counter-terrorism, energy, technology, education, and health," he said. "I have travelled all over the world with President Trump, and I can attest that his friendship with Prime Minister Modi is real," he added.

Gor also announced that India will be a member of the Pax Silica alliance. "I am pleased to announce that India will be invited to join this group of nations as a full member next month," he said.

Ajit Mishra, senior vice-president (research) at Religare Broking, said "The recent bounce appears to be driven largely by short-covering in heavyweight stocks after six consecutive sessions of decline. At the same time, caution ahead of the earnings announcements from IT majors such as TCS and HCL Tech seems to have prompted some profit-taking in short positions. That said, this rebound should not be over-interpreted. Market participants should look for a sustained move above 25,600 to confirm any meaningful recovery; failing that, the broader corrective trend could resume."

2) Value buying: The rebound was further supported by value buying after five consecutive sessions of decline last week.

Markets had come under pressure in recent sessions amid profit-taking, foreign fund outflows, concerns over possible additional US tariffs on Indian exports and geopolitical uncertainties.

In the past five trading days, the BSE benchmark declined 2,185.77 points or 2.54 per cent, and the Nifty tumbled 645.25 points or 2.45 per cent.

"The Indian market rebounded from the day’s lows as investor sentiment improved following favourable remarks on the trade deal by the US Ambassador ahead of the next round of negotiations. This positive undertone provided a lift to overall market sentiment. Value buying was also evident in consumer and banking stocks, as investors sought opportunities after recent corrections, supported by expectations of stronger Q3 earnings and improving demand," Vinod Nair, Head of Research, Geojit Investments Limited, said.

3) Buying in banking shares: The Nifty Bank index sharply recovered from its day's low on January 12 as markets jumped after US Ambassador Sergio Gor commented on India-US trade deal. The index rose around 677 points intraday to hit its day's high at 59,540.95. Investors are also hoping for better earnings, as December quarter results begin this week. IndusInd Bank shares were the top gainer on the index today, rising more than 2 percent each. ICICI Bank shares followed, rising more than 1 percent. State Bank of India (SBI), AU Small Finance Bank, Yes Bank and Union Bank of India shares gained nearly 1 percent each.

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