MUMBAI: After a sharp decline on Monday, India's benchmark equity indices--BSE Sensex and Nifty50--rebounded on Tuesday. The recovery is driven by positive trade discussions between nations, which also lifted Asian stock markets.
At 11.50 am, the BSE Sensex was higher by about 800 points at 73,924, and the Nifty50 was at 22,418, ahead by about 245 points. Sensex hit an intraday high of 74,422 and Nifty hit a high of 22,578.
Narinder Wadhwa, Managing Director & CEO of SKI Capital services said that the recovery is primarily driven by bargain hunting and positive cues from Asian markets amid renewed hopes for US tariff negotiations. This rebound follows a significant decline on Monday, where the Nifty 50 and Sensex fell by 3.2% and 3%, respectively, marking their largest single-day drops in ten months.
“President Donald Trump announced upcoming tariff negotiations with Japan. However, his threat of additional tariffs on Chinese goods tempered optimism. Asian markets responded positively, with Japan’s Nikkei 225 surging by 6.3%,” said Wadhwa.
All 13 major Indian sectoral indices were in positive territory, with small-cap and mid-cap indices also gaining around 1.2% each. Despite the initial surge, the market corrected later in the session, reflecting ongoing caution among investors amid global trade uncertainties.
Vikas Jain, head of research at Reliance Securities said that there could be more volatility going forward with respect to the credit policy announcements and the tariff date of 9th April effective and weekly expiry on Wednesday being preponed as Thursday is a holiday.
“The lows of sub 47,000 levels for the midcap index and 14,100 for the small cap index will be key to watch from current levels while on the higher side the resistance would be near to the last week high of 52,000 and 16,200 respectively. Any decline below 21,900 could push the index lower for NIFTY50 to 21,300-21,500 levels which will accelerate the fall in midcaps and small caps,” said Jain.
He added that in terms of valuations midcap indices are still trading at 8-10% premium compared to the 10-year long term averages whereas NIFTY50 is at a discount of 3-5% compared to the 10-year averages.
Trivesh D, COO Tradejini said that the bounce comes despite lingering concerns over US President Donald Trump's tariff stance, which has kept investors on edge. He distanced himself from the market's fall, explaining that at times, hard decisions are required to fix underlying problems—his firm tone on pushing ahead with tariffs created ripples worldwide.
“Interestingly, the EU had offered a zero-tariff deal to the US weeks before the announcement, but with no breakthrough, they are now preparing for potential trade retaliation. Through all that, it feels like the markets are pricing in uncertainty with some hope. Nifty's bounce is hopeful that engagement could ultimately prevail over disruption. However, investors remain stepwise cautious, as we often find ourselves during this junction or junctions. During all such like scenarios, it is important to track important international cues as well as domestic fundamentals,” added Trivesh.
Anand K Rathi, Co-founder of MIRA Money said that with news that the government is discussing Free Trade Agreements (FTAs) and considering postponing the imposition of tariffs on India, sentiment has shifted to a more positive outlook. As a result, the stock market has started to recover.
“Does this mean that the recovery is permanent? It's too early to say for sure. For now, it appears that news developments will drive the market for the next few days,” stated Rathi.