Indian benchmarks rose on March 17 in a broad-based rally led by financials with Sensex rising over 400 points and Nifty reclaiming the crucial 22,500 level.
At 12:13 pm, the Sensex was up 368.18 points or 0.50% at 74,197.09, and the Nifty was up 113.15 points or 0.51% at 22,510.35. About 1,759 shares advanced, 1,806 shares declined, and 132 shares unchanged. Here are the key reasons behind the market rally:
1) Rebound in US equities
US stocks rebounded on Friday as investors hunted for bargains at the end of a tumultuous week in which U.S. President Donald Trump's escalating trade war fueled recession fears and doused risk appetite.
A broad rally boosted all three major U.S. stock indexes to solid gains, with recently battered tech-related megacaps enjoying a comeback. Every one of the so-called Magnificent 7 artificial intelligence-related momentum stocks advanced, although six of them remain down on the year.
The S&P 500 and Nasdaq logged their biggest one-day%age gains since November 6, the day after the US presidential election.
Even with Friday's bounce, the S&P 500 and the Nasdaq notched their fourth straight weekly losses. The Dow also posted a Friday-to-Friday dip.
"Coming out of the long weekend, the mood is of cautious optimism given the rally in the U.S. stocks," said Vinit Bolinjkar, head of research at Ventura Securities told Reuters.
However, Bolinjkar does not expect the trend to persist given the excessive negativity over the U.S. economy and looming tariff threat.
US President Donald Trump has reiterated that reciprocal tariffs on several trading partners, including India, will be imposed on April 2.
2) China stimulus hopes
China's latest policy measures lifted Asian stocks on Monday. Nifty Metal index rose over 1% as China's measures to revive its economy were seen aiding base metal prices.
Most Asian equities advanced on Monday after China unveiled fresh measures to boost domestic consumption, although regional investors remained cautious amid escalating global trade tensions.
South Korean shares jumped 1.6% to their highest since February 27, while Malaysia's benchmark climbed 1.1%, extending gains to a third straight session. Taiwan's main index rose more than 1%.
China on Sunday unveiled sweeping measures to boost domestic consumption, including income hikes and childcare subsidies, just days after financial regulators urged an easing of credit restrictions — moves analysts say could revitalise Southeast Asia's biggest trading partner.
3) Rupee at 3-week high
The Indian rupee strengthened on Monday, boosted by dollar sales from foreign banks and as the greenback lingered near a 5-month low against major peers on worries about a slowdown in the world's largest economy, reported Reuters.
The rupee touched a peak of 86.8075 in early trading, its highest level since February 24. It trimmed some of its gains, with traders last quoting at 86.8450 as of 10:55 a.m. IST, up nearly 0.2% on the day.
Asian currencies were mostly range-bound while the dollar index was also little changed at 103.7.
Expert speak
The uncertainty surrounding the reciprocal tariffs kicking in from April 2 will certainly weigh on markets, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
"The near-term market trend is likely to be stable with a positive bias. The positive factors are the steadily declining trend in FII outflows and the outperformance of India over the US last week. This positive trend has fundamental support from the bounce back in FY25 Q3 GDP growth to 6.2%, the spurt in January IIP to 5%, and the decline in February CPI inflation to 3.61%. This positive macro backdrop can support the market in the short-term but cannot sustain a rally in the market. The trade war fears are looming large on global trade and global growth. The uncertainty surrounding the reciprocal tariffs kicking in from April 2nd will certainly weigh on markets. India dubbed the ‘tariff King’ and ‘tariff abuser’ is unlikely to be spared by Trump. This will keep the market jittery, particularly the export oriented sectors will be anxious about the tariff announcements. Domestic consumption themes unaffected by tariffs will be stable," said Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
"Technically, the market is exhibiting non-directional activity; on the lower side, it is consistently finding support near 22300/73300, while profit booking has been witnessed between 22600/74700 and 22650/74900. We believe that the current market texture is non-directional, and traders may be awaiting a breakout in either direction. For the bulls, the key breakout zone is at 22650/74900. A dismissal of the 22650/74900 breakout could push the market towards 22800-22900/75500-75800. Conversely, if the market falls below 22300/73300, selling pressure is likely to accelerate. Below this level, the market could retest levels of 22100-22000/72700-72400," said Shrikant Chouhan, Head Equity Research, Kotak Securities.
With inputs from Reuters
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