Mumbai: India's equity gauges advanced more than 2% each on Tuesday, erasing the losses incurred since April 2, after US President Donald Trump's tariff exemptions for smartphones and electronics spawned a rally in global risk assets on Monday.
The markets were shut on Monday for Ambedkar Jayanti.
Analysts said the optimism on receding tariff uncertainty, following the 90-day pause on activation, and exemptions on items that have the greatest dependence on elaborate Asian supply chains, are expected to drive the benchmark Nifty toward 24,000.
Weak earnings and circumspect immediate-term commentaries are downside risks to the gains, with several sectors expected to report only muted growth in the March quarter.
The Nifty gained 2.2%, or 500 points, to finish at 23,328.5. The Sensex moved 2.1%, or 1,577.63 points, higher at 76,734.9. Both indices have each surged almost 6% in the past five trading sessions cumulatively.
"The markets were relieved as the tariffs turned out to be part of negotiation tactics. While the impact of withdrawal of tariffs from smartphones and electronics is not entirely ascertained, this is anticipated to continue for other products as well eventually," said Dharmesh Kant, head of research at Cholamandalam Securities.
Renewed Buying
Asian markets rallied on Monday, with Japan ending up 0.8% and Hong Kong inching 0.2% higher while China and South Korea rose 0.2% and 0.9%, respectively. Taiwan and Indonesia climbed 1.8% and 1.2%, respectively, on Tuesday.
"The dollar index fell to the lowest level in three months, which could lead foreign investors to allocate to emerging markets and India could be a major benefactor, now that China and the US are in a trade war," said Vikas Jain, head of research at Reliance Securities. "Some short covering and renewed buying led to the gains in the markets today."
Jain said the benchmark indices made a conclusive bottom at 22,000 levels and the optimism in the global markets Monday fuelled the momentum further.
The Nifty Realty Index soared 5.6% on Tuesday, while the auto and metals indices jumped over 3% each. Bank and Financial Services surged over 2.5%, while the Private Bank and PSU Bank indices gained 2.8% and 1.6%, respectively. Consumer Durables, Healthcare and Pharma indices rose around 2%.
Foreign portfolio investors (FPIs) bought shares worth a net ₹6,066 crore on Tuesday. Their domestic counterparts sold shares worth ₹1,952 crore. So far in April, overseas investors divested ₹25,923 crore worth of equities.
"Despite volatility on Trump's future announcements, the markets are expected to bounce back from any declines as corrections are likely to be bought into," said Kant of Cholamandalam. "In the near term, the Nifty can be at 24,000 levels. However, hazy guidance by companies in their fourth quarter earnings, given the tariff turmoil, can cap further gains."
Fear gauge cools
The Volatility Index (VIX)-the market's fear gauge-cooled off 19.8% to 16.13 on Tuesday, suggesting traders anticipate less risk immediately. Technical analysts said VIX has tempered due to the tariff pause and lack of any major events for the time being. "While China and the US are expected to make further tariff announcements, the rest of the countries are not anticipating any major announcements," said Jain. "VIX can cool off another 7-8% from the current levels."
The Nifty Mid-cap 150 index and the Small-cap 250 index soared over 3% each. In the past week, the mid-cap and small-cap indices jumped 4.3% and 5.1%, respectively. Of the 4,256 shares traded on the BSE, 3,266 advanced, while 833 declined.
"In the near term, the positive momentum can drive benchmark Nifty to the multi-week high of 23,800-24,000, after which it is likely to consolidate," said Jain. "The earnings of heavyweights such as HDFC Bank, ICICI bank, Wipro and Infosys could decide the market direction after these levels."
Benefit from govt spending
Kant said investors can buy quality stocks in sectors potentially benefiting from government spending, such as defence, railways, infrastructure and some banking stocks, as these are positioned to weather the volatility. "Banks seem to be passing on the interest rate cuts as they reduce deposit and lending rates, which is supportive for the sector and the domestic consumption theme is also likely to play out in the backdrop of the tax relief in the budget," he said.
The markets were shut on Monday for Ambedkar Jayanti.
Analysts said the optimism on receding tariff uncertainty, following the 90-day pause on activation, and exemptions on items that have the greatest dependence on elaborate Asian supply chains, are expected to drive the benchmark Nifty toward 24,000.
Weak earnings and circumspect immediate-term commentaries are downside risks to the gains, with several sectors expected to report only muted growth in the March quarter.
The Nifty gained 2.2%, or 500 points, to finish at 23,328.5. The Sensex moved 2.1%, or 1,577.63 points, higher at 76,734.9. Both indices have each surged almost 6% in the past five trading sessions cumulatively.
"The markets were relieved as the tariffs turned out to be part of negotiation tactics. While the impact of withdrawal of tariffs from smartphones and electronics is not entirely ascertained, this is anticipated to continue for other products as well eventually," said Dharmesh Kant, head of research at Cholamandalam Securities.
Renewed Buying
Asian markets rallied on Monday, with Japan ending up 0.8% and Hong Kong inching 0.2% higher while China and South Korea rose 0.2% and 0.9%, respectively. Taiwan and Indonesia climbed 1.8% and 1.2%, respectively, on Tuesday.
"The dollar index fell to the lowest level in three months, which could lead foreign investors to allocate to emerging markets and India could be a major benefactor, now that China and the US are in a trade war," said Vikas Jain, head of research at Reliance Securities. "Some short covering and renewed buying led to the gains in the markets today."
Jain said the benchmark indices made a conclusive bottom at 22,000 levels and the optimism in the global markets Monday fuelled the momentum further.
The Nifty Realty Index soared 5.6% on Tuesday, while the auto and metals indices jumped over 3% each. Bank and Financial Services surged over 2.5%, while the Private Bank and PSU Bank indices gained 2.8% and 1.6%, respectively. Consumer Durables, Healthcare and Pharma indices rose around 2%.
Foreign portfolio investors (FPIs) bought shares worth a net ₹6,066 crore on Tuesday. Their domestic counterparts sold shares worth ₹1,952 crore. So far in April, overseas investors divested ₹25,923 crore worth of equities.
"Despite volatility on Trump's future announcements, the markets are expected to bounce back from any declines as corrections are likely to be bought into," said Kant of Cholamandalam. "In the near term, the Nifty can be at 24,000 levels. However, hazy guidance by companies in their fourth quarter earnings, given the tariff turmoil, can cap further gains."
Fear gauge cools
The Volatility Index (VIX)-the market's fear gauge-cooled off 19.8% to 16.13 on Tuesday, suggesting traders anticipate less risk immediately. Technical analysts said VIX has tempered due to the tariff pause and lack of any major events for the time being. "While China and the US are expected to make further tariff announcements, the rest of the countries are not anticipating any major announcements," said Jain. "VIX can cool off another 7-8% from the current levels."
The Nifty Mid-cap 150 index and the Small-cap 250 index soared over 3% each. In the past week, the mid-cap and small-cap indices jumped 4.3% and 5.1%, respectively. Of the 4,256 shares traded on the BSE, 3,266 advanced, while 833 declined.
"In the near term, the positive momentum can drive benchmark Nifty to the multi-week high of 23,800-24,000, after which it is likely to consolidate," said Jain. "The earnings of heavyweights such as HDFC Bank, ICICI bank, Wipro and Infosys could decide the market direction after these levels."
Benefit from govt spending
Kant said investors can buy quality stocks in sectors potentially benefiting from government spending, such as defence, railways, infrastructure and some banking stocks, as these are positioned to weather the volatility. "Banks seem to be passing on the interest rate cuts as they reduce deposit and lending rates, which is supportive for the sector and the domestic consumption theme is also likely to play out in the backdrop of the tax relief in the budget," he said.
You may also like
Gardeners with foxgloves in gardens urged to do 1 thing to keep them coming back
Move to protect against cheap imports hurts Electronics Inc
Huge European country predicts record numbers of tourists and it's not Spain
'I travelled the world in hunt for best beach but it's actually right here in the UK'
Anyone with arthritis urged to use £1.50 kitchen staple to naturally ease pain
