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Journalism of Courage
Domestic stock markets rose over 1.6 per cent on Tuesday tracking gains in global markets after US President Donald Trump announced to postpone implementation of new tariffs on Canada and Mexico by a month, allaying fears of trade war.
The BSE’s 30-share Sensex surged 1.81 per cent, or 1,397.07 points up to end at 78,583.81. The broader Nifty 50 gained 1.62 per cent, or 378.20 points, to close at 23,739.25. During intraday trades, the Sensex rose 1,471.85 points and Nifty surged 401.7 points.
The overall BSE market capitalization, or the total value of all listed shares, rose by Rs 5.96 lakh crore to Rs 425.5 lakh crore.
“Yesterday, the Indian market struggled to absorb the optimism generated by the good union budget due to heightened geopolitical risks stemming from ‘Trump tariff war’. However, India could outperform in a weak global market, and as a rebound has been triggered in the global sentiment, it has fuelled a sharp surge in domestic equities,” said Vinod Nair, Head of Research, Geojit Financial Services.
The sell-off in the market on Monday followed US President Trump’s announcement to impose 25 per cent tariffs on Canada and Mexico and 10 per cent on China from February 4. The tariffs on Canada and Mexico have now been postponed for a month.
“Indian markets have been on a downward trajectory for a while and Trump’s decision to review talks with Canada and Mexico on tariffs sparked a massive rally that saw all sectors end in green. However, volatility would intensify if there is no proper solution to the ongoing tariff war,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
The Nifty has moved up following a falling wedge pattern retest, indicating the possibility of a decent rally in the short term. Additionally, the index has been sustaining above the critical 21EMA (exponential moving average) on the daily timeframe, said Rupak De, Senior Technical Analyst at LKP Securities.
While the overall market sentiment remained positive, large-cap stocks were the preferred choice, said Geojit’s Nair. BSE’s Largecap index rose 1.62 per cent on Tuesday.
The NSE stocks that gained the most included Shriram Finance Ltd (5.65 per cent), Larsen & Toubro Ltd (4.19 per cent), Bharat Electronics Ltd (3.68 per cent), IndusInd Bank (3.68 per cent) and Adani Ports (3.54 per cent).
On Tuesday, foreign institutional investors (FIIs) bought Rs 809.23 crore of Indian equities, while domestic institutional investors (DIIs) sold Rs 430.7 crore of shares, according to the BSE’s provisional data.
For the near term, the market will focus on the Reserve Bank of India’s (RBI) monetary policy announcement on February 7. Most of the economists expect the RBI’s six-member Monetary Policy Committee (MPC) to cut the repo rate — the rate at which the RBI lends to other banks — by 25 basis points (bps) while retaining ‘neutral’ stance in the meeting.
On Tuesday, banking stocks rallied in anticipation of a rate cut in the RBI policy. Nifty Bank rose nearly 2 per cent.
