MUMBAI: India's equity market rebounded on April 8 with the benchmark indices -- BSE Sensex and NSE Nifty50 -- gaining about 1.5 per cent each.
The recovery is driven by positive trade discussions between countries, lifting Asian stock markets.
The Sensex settled at 74,227.08, up by 1089.18 points or 1.49 per cent, and the Nifty50 gained 374.25 points or 1.69 per cent to close at 22,535.85.
In the broader markets, the Nifty Midcap 100 and Nifty Small cap 100 indices gained 2.11 perc cent and 2.13 per cent, respectively.
Meanwhile, the volatility index, India VIX, cooled off sharply by 10.31 per cent to 20.44, indicating easing market volatility.
In the Asian markets, Japan’s Nikkei 225 surged 6 per cent on April 8, Shanghai Composite Index jumped 1.58 per cent, and Hong Kong’s Hang Seng index rose 1.51 per cent.
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 U.S. tariff negotiations.
This rebound follows a significant decline on April 7, when the Nifty 50 and Sensex fell by 3.2 per cent and 3 per cent, respectively, marking the largest single-day drops in ten months.
The fall was attributed to the reciprocal tax imposed by US President Donald Trump last week on goods imported into the world’s largest economy.
This move stoked fears of an all-out global trade war, which according to analysts, are inherently inflationary and could complicate the US Federal Reserve’s monetary policy trajectory.
Furthermore, any escalation in trade disruptions may heighten recessionary risks in the US, leading to a broader slowdown in global economic activity.
“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 per cent,” said Wadhwa.
Among the sectors, all major sectoral indices traded in positive territory, but the Media Index gained the most, rallying over 5 per cent. Top gainers in the Nifty50 pack were Jio Finance, Shriram Finance, BEL, Adani Enterprises and Cipla.
Vikas Jain, head of research at Reliance Securities, said that there could be more volatility going forward with respect to the credit policy announcements.
He added that in terms of valuations midcap indices are still trading at an 8-10 per cent premium compared to the 10-year long term averages whereas NIFTY50 is at a discount of 3-5 per cent compared to the 10-year averages.
Ajit Mishra – SVP, Research, Religare Broking advised market participants not to read too much into this single-day recovery, as tariff-related developments are likely to keep volatility elevated.
“Moreover, the upcoming outcome of the MPC’s monetary policy meeting could add to the market swings, especially on the weekly expiry day. We recommend maintaining a hedged approach, focusing on stocks showing relatively higher strength,” stated Mishra.
Investors would now keenly watch the RBI policy decision on April 9, as a 25-bps rate cut is anticipated.
A rate cut by the RBI may provide short-term support to Indian equities, particularly in rate-sensitive sectors such as banking, NBFCs, real estate, and auto.
