Indian equity markets staged a powerful recovery on Tuesday, with both Sensex and Nifty surging over 2%, fueled by optimism across global bourses following U.S. President Donald Trump’s decision to ease tariffs on electronics and hint at potential exemptions for automobiles. The BSE Sensex soared over 1,500 points while the Nifty added 500 points, led by strong performances in auto, realty, and banking stocks. Amid softening wholesale inflation and easing global crude prices, investor sentiment rebounded sharply, helping markets recoup nearly all the losses triggered by tariff concerns earlier in April.
Global Tailwinds Lift Indian Equities
A wave of optimism swept through financial markets worldwide following signals from the White House that it may ease protectionist measures, particularly tariffs affecting key technology and automobile sectors. In a strategic reversal, U.S. President Donald Trump temporarily removed smartphones, computers, and select electronics from the existing tariff list, and further hinted at rolling back levies on automobiles.
These policy shifts sparked rallies across global indices, with Asian benchmarks like South Korea’s Kospi, Japan’s Nikkei 225, and China’s Shanghai Composite closing in the green. European indices followed suit, and U.S. markets also registered gains on Monday.
This external momentum catalyzed a major rally in Indian equities on Tuesday.
Indices Rally Across the Board
The BSE Sensex jumped 1,577.63 points, or 2.10%, to close at 76,734.89, after reaching an intraday high of 76,907.63, marking a surge of over 1,750 points at its peak. The NSE Nifty also advanced 500 points, or 2.19%, to settle at 23,328.55, after briefly touching 23,368.35.
This robust uptick helped the indices nearly recover from the declines seen earlier this month following Trump’s initial tariff escalation on April 2. The gains were broad-based, with all BSE sectoral indices finishing the session in positive territory.
Sectoral and Stock Performers: Autos and Banks Lead the Charge
Among the standout performers were sectors closely tied to tariff-sensitive industries:
- BSE Auto, Realty, Capital Goods, and Industrials indices surged up to 5%, reflecting renewed investor confidence.
- IndusInd Bank led the Sensex pack, skyrocketing by 6.84%, as banking stocks benefited from easing inflationary pressure and strong global cues.
- Tata Motors, with its global footprint and exposure to the auto export market, jumped 4.50%.
- Other top gainers included Larsen & Toubro, Axis Bank, Adani Ports, HDFC Bank, ICICI Bank, and HCL Technologies.
Defensive stocks like ITC and Hindustan Unilever ended in the red, reflecting a typical shift in capital toward cyclical and growth-oriented segments during broad-based rallies.
Inflation Eases, Providing Macro Support
The bullish sentiment was further underpinned by macroeconomic data indicating a slowdown in wholesale price inflation. Government figures showed WPI inflation eased to 2.05% in March, down from 2.38% in February, offering some relief to policymakers and market participants wary of rising input costs.
The dip in inflation, coupled with declining crude oil prices—Brent crude fell by 0.52% to USD 64.54 per barrel—is likely to bolster corporate earnings in sectors such as transport, logistics, and manufacturing in the upcoming quarters.
Foreign Fund Flows and Caution Ahead
Despite the day’s optimism, Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth Rs. 2,519.03 crore on Friday. This underscores a degree of caution in global capital flows, possibly driven by profit-taking or near-term uncertainty.
Market watchers advise vigilance as global geopolitical dynamics remain fluid. The ongoing tariff negotiations, potential interest rate movements in the U.S., and domestic policy developments could all influence sentiment in the weeks ahead.
Outlook: Can the Momentum Be Sustained?
While Tuesday's rally reflects renewed risk appetite, sustainability will hinge on several key variables:
- Follow-through on U.S. tariff rollbacks could ease global trade tensions and sustain the risk-on mood.
- Earnings season is underway, and companies' forward guidance will offer crucial insight into sector-specific resilience.
- Liquidity dynamics, both from FIIs and domestic institutions, will play a defining role in determining whether this rally can evolve into a longer-term uptrend.
Analysts remain cautiously optimistic, noting that if macroeconomic indicators remain favorable and external risks are contained, Indian equities could continue their upward trajectory—albeit with intermittent volatility.
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