MUMBAI: The Indian stock market gained sharply on Friday, buoyed by positive global sentiment after US President Donald Trump announced a 90-day suspension of the 26% reciprocal tariffs imposed on India.
The benchmark indices– BSE Sensex advanced 1,310 points or 1.77% to settle at 75,157, and NSE Nifty50 surged 429 points or 1.92% to close at 22,828. Broader market indices mirrored the benchmarks with the Nifty Midcap 100 and Smallcap 100 indices witnessing strong gains of 1.90% and 2.80% respectively.
Except for TCS and Asian Paints, the remaining 28 stocks in the Sensex pack were trading in the green. Tata Steel rallied about 5%, followed by Kotak Mahindra Bank, Power Grid, NTPC and Reliance Industries Ltd.
The rally followed the Trump administration’s decision to temporarily halt reciprocal tariffs on 75 countries, including India. While the 10% unilateral tariffs on imports remain in place, the US will not impose additional retaliatory duties for the next three months.
Analysts are now weighing that India’s ongoing negotiations with the US may result in lower taxation. They also expect benefits from the ‘China+1’ theme given the US and China are going hard against each other.
The US has escalated trade tensions with China, imposing a 145% tariff - comprising a 125% reciprocal levy and an additional 20% duty over allegations of Chinese fentanyl supply in the US. In response, China has retaliated by raising tariffs on US goods from to 125%, further intensifying global trade uncertainties.
Vinod Nair, Head of Research at Geojit Investments said that any development in the bilateral trade negotiations (between India and the US) can alter the near-term outlook on the export-driven sectors.
“The supportive domestic environment with an ease in interest rates and a benign inflation trajectory is encouraging investors to have a balanced portfolio to aid in a better risk-reward in the long term,” he added.
Prashanth Tapse, Senior VP (Research), Mehta Equities said that intra-day volatility with a negative bias is expected to make a comeback as China hitting back with 125% tariffs on US imports could trigger a sell-off going ahead added Tapse.
Meanwhile, Union Mutual Fund, in its latest quarterly State of the Market report, has upgraded Indian equity markets to the "Attractive Zone" in its Fair Value Spectrum indicator.
“Healthy corporate and banking sector balance sheets, prospects of a demand revival fueled by tax relief and expanded welfare schemes, and the potential onset of a new private capex cycle are key positives driving our outlook," said Harshad Patwardhan, Chief Investment Officer, Union Asset Management (Union AMC).