Benchmark stock indices rebounded sharply on Tuesday, with the BSE Sensex surging over 1,100 points and NSE Nifty reclaiming the 22,500 mark, as investors took comfort from positive global cues.
Sensex settled 1,089.18 points or 1.49 percent higher at 74,227.08, while the broader Nifty rallied 374.25 points or 1.69 percent to 22,535.85. The gains helped the indices recover some of the Monday’s sharp losses, when they had logged their worst single-day fall in 10 months.
Almost all of the 13 major sectoral indices were trading in the green, following a recovery in Asian peers and across the board buying.
Titan, Adani Ports, Bajaj Finserv, State Bank of India, Axis Bank, UltraTech Cement, Larsen & Toubro and Tata Steel were the biggest gainers.
Key factors behind market rise today
1) Global recovery supports sentiment: Markets in Asia bounced back strongly, with Japan’s Nikkei 225 rising over 5.5 percent and China’s Shanghai Composite up nearly 1 percent. Investors hoped that the United States may soften its stance on tariffs after initial reactions caused a global sell-off.
US markets closed mixed overnight. While the Nasdaq Composite inched up 0.10 percent, the S&P 500 and Dow Jones declined modestly.
2) US-China trade tensions seen as isolated: President Donald Trump threatened an additional 50 percent tariff on Chinese imports if Beijing does not withdraw its retaliatory duties. However, other major economies, including the European Union and Japan, have opened channels for negotiation.
"There are some significant takeaways from the ongoing chaos. One, the trade war is like to be confined to US and China. Others including EU and Japan have opted for negotiations. India has already started negotiations on a BTA with US. Two, the risk of a recession in the US has increased. Three, China is likely to be the worst-hit economy. Trump’s threat of another 50% tariff on China will, if carried out, almost freeze Chinese exports to US," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
3) Robust Indian macros lend support: Experts pointed to India's stable macroeconomic fundamentals as a key support for equities. The Economic Survey for 2024-25 has projected growth in the range of 6.3-6.8 per cent for the current fiscal, with downside risks from global headwinds.
"India’s macros are solid. Growth prospects are healthy, and valuations, especially for largecap stocks, remain fair. These factors make Indian equities relatively attractive," added Vijayakumar.
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Technical outlook remains cautious
"After reclaiming 22,165, we are now eyeing 22,522 as the next target. However, a spike of nearly 70 percent in India VIX suggests that volatility may remain high," said Anand James, Chief Market Strategist at Geojit Investments.
James added that the Nifty may see some selling pressure near 22,660 and could consolidate between 22,320 and 22,660 levels in the coming sessions.
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