Markets jump 1.5% on positive global cues, bargain hunting; rupee rallies
Weakening US economic data and increasing expectations of Federal Reserve rate cuts have also boosted the market sentiment
Additionally, India’s better-than-expected trade deficit, China’s consumption boost, and value buying at crucial support levels further bolstered market confidence Domestic stock markets broke out of a week-long consolidation on Tuesday, surging nearly 1.5 per cent and reinforcing the recovery momentum. The BSE Sensex jumped by 1,131 points to regain the 75,000 level at 75,301.26 and the NSE Nifty index gained 325 points to 22,834.30 in bargain hunting at cheap valuations amid positive global cues.
The broader market also remained bullish with Mid-cap Index rising 2.10 per cent and the Small-cap Index soaring 2.73 per cent. The rally was led by sectors like real estate, auto, capital goods, consumer durables, power and banking.
Vishnu Kant Upadhyay, AVP – research & advisory, Master Capital Services, said investor sentiment remained upbeat, driven by improving global market conditions and rising optimism over a potential truce deal between Russia and Ukraine, as the US and Russian Presidents are scheduled to meet on Tuesday. Further, weakening US economic data and increasing expectations of Federal Reserve rate cuts have also boosted the market sentiment. Analysts now expect the Reserve Bank of India to cut Repo rate by another 25 basis points in the April policy review.
Additionally, India’s better-than-expected trade deficit, China’s consumption boost, and value buying at crucial support levels further bolstered market confidence. “The Nifty 50 is expected to extend its gains toward 23,000–23,100, and a decisive breakout above this zone could propel the index further toward 23,500–23,800. On the downside, 22,350–22,300 remains the immediate support zone, providing a strong cushion for any pullbacks,” he said.
“Global factors such as the Federal Reserve meeting and geopolitical uncertainties may introduce intermittent volatility. A ‘buy on dips’ strategy remains prudent, with focus on sectors/themes that align with the prevailing market trend,” said Ajit Mishra, SVP, research, Religare Broking.
Softer-than-expected US retail sales data fueled expectations that the Federal Reserve might consider interest rate cuts later this year. Additionally, European markets opened on a positive note, further boosting sentiment.
Meanwhile, the rupee extended its gaining streak for the third consecutive session on Tuesday, appreciating 25 paise to close at 86.56 against the US dollar. The rally was supported by strong domestic equity markets and a weaker greenback amid disappointing US economic data. A major factor behind the rupee’s rally is India’s latest current account data, which showed a surplus in February, largely attributed to a trade surplus and stable remittances.
On the macro front, the export performance has been volatile this fiscal. Merchandise exports have been trending down for four months. Geopolitical uncertainties, including the tariff hikes proposed by the Donald Trump administration in the US, continue to pose risks. Imports have outpaced exports so far in fiscal 2025, causing the trade deficit to widen.
Crisil said the US’s proposed tariff hike on Chinese goods, coupled with the expected slowdown in the Chinese economy, will trigger aggressive exports from there to other Asian markets, including India. The merchandise trade deficit, thus, bears watching. That said, the surplus in services trade and robust flow of remittances provide a cushion and should keep the current account in the safe zone. “We project current account deficit at 1 per cent of the gross domestic product in fiscal 2025 and 1.3 per cent in fiscal 2026,” it said.
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