MUMBAI: The Indian stock market opened sharply higher on Friday, buoyed by positive global sentiment after US President Donald Trump announced a 90-day suspension of the 26 per cent reciprocal tariffs imposed on India.
The Nifty 50 index opened at 22,695 and hit an intraday high of 22,896 (up 2.2 per cent) in the first three hours of trading. The BSE Sensex opened at 74,835 and touched an intraday high of 75,411 (up 2.1 per cent). In the broader market, the BSE Small-cap index and the Mid-cap index advanced about 2 per cent each.
Except for Nestle and Asian Paints, the remaining 28 stocks in the Sensex pack were trading in the green. Tata Steel is up by more than 5 per cent, followed by Kotak Mahindra Bank, Bajaj Finserv, Power Grid and Tata Motors.
The rally followed the Trump administration’s decision to temporarily halt reciprocal tariffs on 75 countries, including India. While the 10 per cent unilateral tariffs on imports remain in place, the US will not impose additional retaliatory duties for the next three months.
Further, analysts believe that India’s ongoing negotiations with the US may benefit the country from ‘China+1’ theme.
However, the US has escalated trade tensions with China, imposing a 145 per cent tariff - comprising a 125 per cent reciprocal levy and an additional 20 per cent duty over allegations of Chinese fentanyl supply in the US.
In response, China has retaliated by raising tariffs on US goods from 34 per cent to 84 per cent, effective April 10, further intensifying global trade uncertainties.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said that gap up opening in the Nifty this morning is unlikely to sustain beyond a point given the elevated uncertainty in global markets.
President Trump’s retreat from the reciprocal tariffs imposed on countries except China, was forced by the US bond market where instead of safe-haven buying in US treasuries, there was big selling, pushing the 10-year bond yield up to 4.5 per cent.
In brief, bond vigilantes forced Donald Trump to retreat. The 10-year yield is even now at around 4.46 per cent. The dollar index has fallen to 100.
“There is no room for a sustained rally in the market in the present uncertain context. But investors can take relief from the fact that Indian macros are good and we are one of the least impacted countries in this trade war. Investors have to be cautious and should prioritise safety over returns. Safety now is in fairly valued largecaps,” added Vijayakumar.
